Coronavirus & Next

Great Depression

The Insanity of Caution

Forgive them for they Know Not What They do
Or are they just Corrupt?

By Martin Armstrong

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Contents

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Preface .................................................................................................................................................................... 6
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Creating Models to Hide Human Opinions .................................................................................. 11

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Modeling Reality ............................................................................................................................................ 18

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The Journey ....................................................................................................................................................... 25

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Analyzing the Brain ....................................................................................................................................... 44

The Quest for the Holy Grail or Finance ......................................................................................... 48
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The Complexity of the Global Economy ....................................................................................... 52

The Dream of Socrates .............................................................................................................................. 57
Creating Socrates ......................................................................................................................................... 61
Bringing Socrates to Life............................................................................................................................ 70
Quarantine & Panic ..................................................................................................................................... 87
The Second Wave ........................................................................................................................................ 90
Flattening the Curve ................................................................................................................................... 93
How to Destroy a Civilization by Self-Distancing...................................................................... 95
Infamous Johns Hopkins COVID-19 Tracking Map .............................................................. 100
European Political Coup? ...................................................................................................................... 108
Is this a Political Coup ............................................................................................................................. 116

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What Makes a Recession a Depression?..................................................................................... 118
The Timeline ............................................................................................................................................... 126
The Civil Unrest ............................................................................................................................................. 127
A Lesson of Authoritarianism ............................................................................................................... 133
Panic is the Authoritarian’s Ticket to Power ............................................................................. 138
The Cycle of Revolution ......................................................................................................................... 142
Russia & the Coronavirus........................................................................................................................ 149
Conclusion ...................................................................................................................................................... 152

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 Preface

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N the Manipulating the World Economy, I concluded that the central banks
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were done. Keynesian Economics was finished, and the only way out was
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political reform. I myself was very pessimistic that they would ever be able
to come to an agreement in time. What I never anticipated was that they
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would stage some sort of James Bond plot to take this to the next level and
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create an unjustified health panic where people would surrender their rights and
politicians could alter everything in the name of saving the world.
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What is the world going to look like Post-Coronavirus? People do not realize but
calling this an emergency grants elected government totalitarian powers to the
point they can even postpone elections and imprison you without a trial. The
state can oblige citizens to provide services, seize companies, and all legal
protection is being postponed around the world in the blink of an eye.

The news has been dominated by this coronavirus pandemic created by

academics on nothing more than a guess. I am not a doctor and offer no
opinion in that regard. I just look at the data and it appears to be something
that tops rather quickly if we look at Asia.

The role of governments has expanded to deal with the virus in tremendous ways
that would have been unthinkable just at the end of 2019. This has been the
most dramatic extension of the state power since the second world war which
has even exceeded the powers seized following 911. Worst still, this has taken

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place with almost no time for debate or review and the press has failed to
defend the people as their role was to be under Freedom of the Press. They have
interpreted that as the freedom to choose sides exercising opinion rather than
integrity and impartiality.

However, this power-grab is no accident. Only the state can enforce isolation
and business closures to stop the claimed virus. Under Keynesian Economics, the
theory of dramatically expanding the money supply in accordance with Modern
Monetary Theory is again claimed that only government possess the power to
help offset the economic collapse being caused by questionable models and
proposals that if we are all forced to stay home, we can beat a virus which is

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less aggressive that even the annual flu.

Those who have believed in limited government and free open markets, this virus

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has been used to forever silence any such opposition to the leftist agenda. The
various state governments are encouraged to act decisively and rashly without

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and debate or vetting of the analysis being put forth.

History warns that governments always seize more and more power with every
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crisis and will never relinquish that power once they have grasped in their hand.
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Today the implications of what has taken place goes beyond the economy, it
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justifies the full surveillance of individuals and the justification of arrests under the
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expanded theory that if you are infected and move about, you are engaging
in terrorism.
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The U.S. Justice Department has quietly asked Congress for the ability to ask chief
judges to detain people indefinitely without trial during emergencies — part of
a push for new powers that comes as the novel coronavirus spreads throughout
the United States. They are suspending Habeas Corpus which is entirely

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unconstitutional. The Habeas corpus first originated back in 1215, through the
39th clause of the Magna Carta signed by King John, which provided "No man
shall be arrested or imprisoned...except by the lawful judgment of his peers and
by the law of the land,"

The US Constitution clearly states:

Article One, Section 9, clause 2

The Privilege of the Writ of Habeas Corpus shall not be suspended, unless
when in Cases of Rebellion or Invasion the public Safety may require it.

The DOJ is seeking to take the Constitution and focus on “Invasion the public

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Safety may require it” using the coronavirus. The Founding Fathers never
anticipated such an interpretation, but this ends all freedoms whatsoever. There

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is no authority to suspend the right to Habeas Corpus for a virus. This is a power

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grab that can deny the right to trial by jury and

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simply imprison people claiming they have some
disease and no ability to even prove that they do
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France passed a law giving the government the

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power not just to control people’s movements,

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but also to manage prices and requisition goods.

The fear-factor has reversed political fortunes for
now President Emmanuel Macron, who was so
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hated with the Yellow Vest Movement, has seen

his approval ratings soar for now being dictatorial
which they protested against when he raised fuel
taxes to save the planet.

When we look at the 2007-2009 crisis, what the

America Congress has just past with $2.2 trillion in spending, is about 10% of GDP
which is twice what was promised during the last financial crisis. In Europe, we
see credit guarantees offered by Britain, France and other countries that are
even greater than the United States reaching about 15% of GDP.

Hong Kong adopted apps on phones that show where you are in order to
enforce quarantines. China has a passporting system to record who is safe to be
out. South Korea has justified these new police powers stating that this will allow
them to automatically trace the contacts of fresh infections, using mobile

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technology, and they will be able to fight future viruses gets results in ten minutes
instead of 24 hours. What we are witnessing in Asia is a warning for the what the
world will look like after this virus. Medical and electronic privacy will no longer
exist. It is the most dramatic evolution of state power since the second world war
that no one ever imaged was possible in peace time.

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We have others advocating we need to implant chips in everyone under ID2020

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to verify if we are health. The government will be able to find us like a GSP to
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locate a lost car or phone. We have crossed a line here where the power behind
the curtain have seized control of our future and it appears to be right on
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schedule.

This unimaginable increase in state power has taken place with no time for
debate no less allowing actual people to consider if they are willing to surrender
all their freedoms from privacy to movement. Oh, there will be those who falsely
believe that these powers are only temporary. The powers seized following 911
have not subsided. You are pre-screened before you can get on a plane both
by your destination and your port of embarkation.

Nevertheless, the sheer magnitude of the response to covid-19 has been more
akin to wartime but the enemy is not some invading army, it is a virus from within.
History is our witness that that crises lead to a permanently larger government
with many more unlimited powers and the never-ending expansion of taxes to
pay for them. The welfare state, income tax, nationalization, all grew out of
conflict and crisis of the Great Depression and World War I which even altered
the Federal Reserve.

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There are so many conflicts of interest taking place it is hard to really sort out the
truth. We have reports that WHO (World Health Organization) is accused of being
influenced by Beijing after a senior official 'hung up on' a journalist who asked
about Taiwan's response to coronavirus.

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Dr. Anthony Fauci has a $100 million conflict of interest which is why he was
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opposing Trump. He is in league with Bill Gates who has pledged $100 million for
Fauci to play with. The National Institute of Allergy and Infectious Disease (NIAID,
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a division of National Institutes of Health, NIH) director Dr. Anthony Fauci, who
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was against using chloroquine, said in an interview with CNN’s Anderson Cooper,
“There’s no magic drug for coronavirus right now,” and lectured, “Let me put it
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into perspective for the viewers .. there has been anecdotal non-proven data
that it [chloroquine] works… but when you have an uncontrolled trial you can
never definitely say that it works.”

I have warned that the CDC takes private money through its foundation. Gates
even gave Fauci's Foundation $13.5 million. I do not believe we can trust Fauci
in the least. The CDC should NEVER be
allowed to be bought in this way. It is Gates
who wants to inject us all with microchips. I
seriously do not understand if all his money
has simply gone to his head.

Trump should fire Fauci first shut down all

private donations from anyone, especially
Bill Gates.

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 Creating Models to Hide
Human Opinions

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ne of the people who has assisted in this panic over the coronavirus has
been Neil Ferguson, who led the @imperialcollege authors who warned
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of 500,000 British and 2.2 million Americans would die all from this
coronavirus. Now, low and behold, Ferguson has himself tested positive for the
virus and has suddenly announced a change of view.

I find this very curious that he would advocate shutting down the economy when
he knows the economic damage this would have. The number of people whose
jobs will be lost, and small businesses destroyed around the world is incalculable.
Ferguson now says both that the U.K. should have enough ICU beds and that

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the coronavirus will probably kill under 20,000 people in the U.K. and interestingly
he now admits that more than half of whom would have died by the end of the
year in any case because they were so old and sick. Ferguson now predicts that
the epidemic in the U.K. will peak and subside within “two to three weeks” after
advocating 18+ months of quarantine would be necessary.

Computer modeling in medicine as well as economics/finance has tended to

work only in theory. When these same systems are actually attempted to be
used, they inevitable fail.

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IBM’s Watson was simply a giant Neural Network. The idea was that IBM’s Watson
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could search the entire internet and gather every piece of information possible.
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The false belief was that Watson would find the cure for cancer and other
diseases.
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It was simply believed that gathering all the data and throwing it into a Neural
Network and shazam – out would come the cure. That was the easy part. What
IBM lacked was the expertise in how to do research. How do you know that one
piece of info is the key or more important than another? They lacked the talent
to create a real analysis capability.

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Ferguson's model that has destroyed the world economy was highly
questionable just from a programmer’s perspective. This model was obviously
based on human assumptions that were WRONG! Once you start with a
presumption there is no possible way the model will ever produce meaningful
results for it will be as biased as any human judgment to begin with.

There can be NO HUMAN INTERVENTION, nor any HUMAN ASSUMPTION imposed.

Once you start with such a rule, it is not an Artificial Intelligence system but only
an expert system that looks up the answer based upon the assumptions. What
Neil Ferguson explained before the British Parliament why he was wrong.

“We based our recommendation on early data from China saying 20% of

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those infected would end up in critical care”

An Oxford Study suggested than one in a thousand would require hospitalization.

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They actually used the data as things began to develop. Yet it seems as though

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despite the fact that this model was nothing more than a human presumption
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that was drastically wrong, governments are not quick to reverse their newly
found powers.
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In the United States, a federal government plan to combat the coronavirus

warned policymakers last week that a pandemic “will last 18 months or longer”
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and could include “multiple waves,” resulting in widespread shortages that

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would strain consumers and the nation’s

health care system.
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A simple comparison with other viruses and

their lifespans would have been helpful.
Coronaviruses are common in different
animals. However, rarely does an animal
with coronavirus infect humans. It certainly
seems possible by eating animals that might
carry such a virus. As of March 10th, 2020,
4,087 deaths had been attributed to
COVID-19. However, 64,385 people had
recovered from the illness. So, it was not
serious justified health issue to warrant such
a panic. That does make it seem that there
is something else behind it.

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There are many different kinds of coronaviruses. Most seem to cause colds or
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other mild respiratory (nose, throat, lung) illnesses. There have been far more
deadly versions such as the coronaviruses that are known as Severe Acute
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Respiratory Syndrome (SARS) and the Middle East Respiratory Syndrome (MERS).

Cyclically, it is very curious that SARS took place two 8.6-year cyclical intervals
previously — 17 years ago. Some people say this version must be serious because
China has cracked down really hard. However, at the time of SARS, the Chinese
government was highly criticized for not addressing the issue. This time around, it
seems the response is in relation to the criticism they got with SARS rather than
a reflection of its deadly nature.

Interestingly, when we run our models exclusively on Coronaviruses, they conform

to the 8.6-year cycle. This outbreak came precisely on target – 2020.073 or
January 25, 2020. Coronaviruses are named because they appear different
under the microscope. Coronaviruses look like they are covered with pointed
structures that surround them like a corona or crown. Therefore, it appears
differently which is why it is called a coronavirus.

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If we look at the Severe Acute Respiratory Syndrome (SARS) outbreak, it was first
discovered in Asia in February 2003. It was believed to have begun in November
2002. We ran our model starting November 15, 2002. The outbreak lasted
approximately six months as the disease spread to more than two dozen
countries in North America, South America, Europe, and Asia before it was
stopped in July 2003 and died out. Therefore, if the timeline holds for most viruses,
this one should top out in April/May 2020. Perhaps the last case may be
June/July. There is NO INDICATION that this will last longer than any other virus
issue.
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 When we look at MERS-CoV, it was
during September 2012, when WHO
had been notified of 2494
laboratory-confirmed cases of
infection with MERS-CoV in the
Middle East. The fatality rate was
34.4%. MERS-CoV appears to have
come from an animal source in the
Arabian Peninsula. Researchers
have found MERS-CoV in camels
from several countries. Studies have

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shown that direct contact with
camels is a risk factor for human

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infection with MERS-CoV.

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In this incident, MERS was first
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identified in September 2012 and
had subsided by June 2013. There
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was a second outbreak in 2015 in

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South Korea. The first patient of the

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outbreak developed symptoms on

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May 11, 2015. WHO and the South

Korean government estimated that
the outbreak ended in July 2015,
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after about two months. By the end,

there were 186 confirmed cases and
38 deaths.

Therefore, despite all the doom and

gloom and the level of outright
panic, we should see this subside
probably no later than July 2020 with
the peak April/May. It clearly
spreads easier than SARS or MERS,
but it is about on par with the version
of influenza that mutates each year.

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We may see this reappear again in the next flu season of 2021/2022. If it mutates
like influenza for each season, then it can perhaps become more deadly at that
period in time. Therefore, SARS came 17.2 years ago and MERS 8.6 years ago.

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Cyclically, there may be a resurgence in two years which would be in 2022. For

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any new type to appear or a serious mutation, that might be 2028 if this
continues to follow the 8.6-year cycle.
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There is no doubt that Ferguson’s model was nothing more than using a pocket
calculator and building on the flawed theory that corrupts most forecasts even
the Climate Change prognostications. They assume whatever trend is in motion
will stay in motion. They totally ignore a cycle and presume that if 10 people get
sick today, they infect 10 others tomorrow, and we end up with millions in 3
weeks. It’s great that they learned how to use a pocket calculator. Now the next
step is cyclical analysis which just so happens to be even the reason behind the
flu season as well as the rise and fall of the ocean tides.

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 Modeling Reality

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any people have dreams of creating an Artificial Intelligence (AI)
computer and then there are those who theorized that somehow it
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would become alive and wipe out humankind. Yes, 99% of what
people pretend is Artificial Intelligence is nothing but an Expert System, which
amounts to a look-up table. An Expert System is simply a list of, let’s say, diseases
with their symptoms. You ask questions stating your symptom and it looks
up predefined conclusions and says – wow, you have this disease. There is
nothing remarkable to this sort of look-up program, but it will be marketed as AI.
Real markets and disease, like everything else in this world, are nonlinear and the
process by which they move appears to be random on the surface because
people do not understand cyclical movement and patterns. Therein lies the
tremendous problems in modeling for if you cannot see the hidden patterns, you
cannot achieve a valid result.

Real Artificial Intelligence is something that learns and analyzes on its own to
create its original conclusion. The countless claims of using AI to forecast markets
and the economy can be distinguished rather easily from rule-based systems.

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Some may look at seasonal cycles taking a chart, calculate the seasonal cycle
how retail sales expand during the Christmas season, and then project the
potential future pattern. This will appear nice and neat, but that is just making a
calculation which can be done with a pocket calculator. There is nothing original
in this process.

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Then we have claims of using Neural Networks like IBM’s Watson where it was
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hoped that it would be able to find a cure for diseases. That did not work very
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well because just accumulating data does not result in being able to predict
the future. It only illustrates the difference between Book Smart and Street Smart.
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Book Smart may memorize every fact, but they cannot apply them for they
cannot see beyond the data. The Street Smart may not know every fact, but
they have creativity and can move quickly with the
change in their surroundings.

Degrees from school mean something to doctors and

lawyers. There are no degrees to become a hedge
fund manage nor a politician no less President of the
United States. Even President Abraham Lincoln had only
about a year of formal schooling of any kind! President
Andrew Johnson never went to school at all. The list of
people who became President of the United States
and dropped out of college or never went to school
includes George Washington, James Monroe, Andrew Jackson, Martin Van

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Buren, William Henry Harrison, Zachary Taylor, Millard Fillmore, Abraham Lincoln,
Andrew Johnson, Grover Cleveland, William McKinley, and Harry S. Truman.

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When we look at the private sector, some of the greatest entrepreneurs also

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dropped out of school Sidney Weinberg of Goldman Sachs, who indeed was

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known as Mr. Wall Street, started as an assistant to a janitor. He dropped out of
school at 13. Richard Branson is now Sir Richard Branson and he dropped out at
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16. Charles Culpeper also dropped out of high school and founded Coca Cola.
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Then there was Walt Disney who dropped out of high school at 16, Henry Ford,
Bill Gates, Steve Jobs, and Michael Dell. Add the people who their teachers
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thought they would never amount to anything because they were dreamers
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included Winston Churchill and Albert Einstein.

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What this list proves is why Neutral Networks have failed to deliver the promised
land of computer in a new world of Artificial Intelligence. There is no degree of
formal training that will ever be able to teach you CREATIVITY which is the critical
element combined with CURIOUSITY. If you are not curious, you will never
discover anything new. The entire
foundation assumed that a Neural
Network would discover something
profound is the stuff made up for
bedtime stories of plots for Sci-Fi
movies.

Neural Networks can predict the

next words and what you are looking
for in Google or Apple’s Siri. Yet these
are fairly rudimentary and far from

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the complexity of predicting the world economy. All that is taking place is that
some words will never follow each other. Using the rules for language creating
past, present, and future tense are all basic simple solutions for Expert Systems or
Neural Nets,

Nevertheless, attempts to forecast the future of markets or disease no less war

have been met with a dismal success rate of far less than even 33%. The design
of such models has been flat insofar as attempting to forecast a single market
or statistic in isolation.

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Virtually every computer program from Black–Scholes to Random Walks on

down have failed over the past decades for the same reason – they were based
upon tiny slices of historical data that led to false assumptions. There was a 14th-
century Franciscan friar by the name of William of Ockham who is credited with
having formalized the principle that “simpler solutions are likely to be more
correct than complex ones.” Hence, we seem to always try to reduce
everything to a single cause and effect. Some have rephrased this as “keep it
simple, stupid,” and it has emerged with the label “Ockham’s razor,” which is
supposed to be a tool that cuts through complexity to get from point A to point
B. However, when it comes to forecasting the world economy and all its
components from disease to war, you must take the complexity as a whole
otherwise you cannot forecast the component parts.

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 However, is Ockham’s razor the very problem that
prevents us from seeing reality? It was, after all, this very
principle that supported the flat earth theory. It prevailed
and even led to the execution of people such
as Giordano Bruno (1548–1600) for daring to propose that
the universe was not revolving around a flat Earth.

Even Galileo Galilei (1564-1642) was charged in 1633 by

the Roman Inquisition and forced to sign the confession or
suffer the same fate of Bruno that the Earth was flat. He
observed how moons revolved around planets and were round. Nobody would

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listen nor would they dare look through his telescope.

In funds management, the statement that proves there is complexity is a legal

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requirement: Past performance is not a predictor of future success. All

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investing involves the risk of loss. While there is a desire to make complexity

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simple and understandable, this is really completely misguided. Clearly, simplicity
rather than complexity is by no means the proper course of action for we then
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cannot see the interconnections of how everything truly functions.

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The greatest mistake in the analysis is always trying to reduce any effect down
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to a single cause. The world is a complex mechanism. It is indeed like a rainforest.

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There are countless species, and each is interconnected. Exterminate one and
you will find that it was the food source for another. That species, in turn, was the
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food source for yet another and so on.

The world economy is equally complex. This is why I say we are ALL
CONNECTED. Create a war in one region, we may not be involved with our
troops, but the capital flows shift. How can we forecast anything by ignoring all
the interrelated influences?

There are those who advocate that the best way to achieve your long-term
investment objectives is to keep in simple. Yet they are looking at history and
banking everything on a continuation of inflation.

Rapid technological development in recent years across industries has helped

to expose the fact that we live in a global economy and are all interconnected.
Fund managers, because of regulation, are blinded by this interconnected world
for they are not allowed to invest globally in a diversified portfolio. Obviously, we
have so many specified funds and people claiming to “just keep it simple” with

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a hold policy because it always comes back. But the buy and hold strategy will
often lead to a collapse in confidence that people cannot endure such
prolonged periods of time.

Markets, on the one hand, appear deep and complex, rendering them
impossible to understand fully when limited even by law to a purely domestic
view. This has resulted in the advice of buy and hold as a strategy to fight against
complexity with simplicity. Then there are investors who believe they need
investment solutions that are nimble and flip positions based upon the talking
heads on TV. They are brainwashed by their market myths. This has merely
become grand sophistry trying to fight complexity with a simplicity that sounds

om
logical by reducing all activity to a single cause and effect.

Asset allocation philosophies have emerged which invest other diverse market

l.c
sectors knowing that they are polar opposites. They assume that the world is too
complex beyond their comprehension so spread the wealth and hope for the

gm :
ai
s@ by
best. These strategies have expanded as of late beyond the traditional
stock/bond mix of 60/40 that was really exclusively domestic-oriented. In modern
on d
times post-1985, alternative strategies
.li se

emerged introducing hedge funds

that also incorporated foreign
et a

exchange, commodities, options,

je rch

private debt, venture capital, and

even real estate. But the promise of
Pu

many hedge funds has proven to be

just a pipedream as they investment
strategy was constructed on just
personal opinion. They too have gone
down in flames just as the Ferguson
model on the coronavirus.

The illusion that simplicity provides the best long-term investment return is really
predicated upon an assumption since the Great Depression that if you just held
through all the 50-70% corrections you would be OK at the end of the day. The
problem with this argument is that we are all human. I have never met someone
who can actually do that.

Then there is the problem of surviving the long-term. The city of Detroit
suspended its debt payments in 1937 and resumed in 1963. If you owned such

23
bonds for retirement, perhaps your heirs benefited, but you would have died
broke and starving. It all depends where you are in the business cycle.

om
l.c
gm :
ai
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on d
.li se

Computer models have failed because of this total lack of historical data that
et a

has prevented their ability to survive a great crash. Then we have economic
je rch

theories such as Keynesian Economics which completely ignore human nature.

They presume that they can just lower interest rates and people will then borrow
Pu

and spend, and banks will lend. They are obvious to the fact that interest rise in
a panic because there is a fear of Credit Risk. Bank will not lend in a panic for
they do not trust the borrower. People will not borrow to invest when they see
no future. Academics just live in a world of theory – not reality.

Forecasting has been plagued by the basic assumption in our political-

economic-financial world that expects the current trend in motion to simply stay
in motion. They cannot understand the business cycle or that what goes up must
also come crashing down. The only question is WHEN?

24
 The Journey

om
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gm :
ai
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on d
.li se
et a
je rch

S
ometimes if you ask a teenager what they would like to do in life they will
Pu

respond; I don’t know yet. When I look back upon my life, I had believed
that there was something wrong with me. Many of my friends seemed to
have made up their minds as to what they wanted to become – or at least that
what they told themselves. I really did not know. There was no particular career
that seemed to attack me. That made me feel somehow inadequate.

I enjoyed science and history in high school. I had signed up for Latin, French,
and Spanish class. After nearly the first semester I was called down to the
principle’s office. I was told that three languages at one time was too much for
any student and I was told I had to drop one. I explained they were all Latin
based so there was no problem. I saw the connections. The word
comprehend/understand in English was intellegite in Latin, comprender in
Spanish, and comprendre in French. I was told I had to give up one and take a
study hall. I sort of lost my enthusiasm for school and began to explore studies
on my own.

25
I have relayed before that my father was a lawyer
who had “and son” on the door when I was born.
But something in me made me see through the
lessons and the hypocrisy that formal education
never taught you the real world.

I did not know what I wanted to do in life. I loved

history from the viewpoint of trying to figure out
what made society tick. Why would it boom and
bust be civil in one instance and march to war in
another? My father, I felt, was disappointed in me. I

om
tended to be attracted to trading and some distant relative had lost a fortune
during the Great Depression, so speculation had a bad name in my family.

l.c
gm :
ai
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on d
.li se
et a
je rch

I had made a lot of money as a teenager. It was the end of silver coins in 1964
and you could run down to the bank, get a rolls of quarters, half-dollars, and
Pu

dimes, cull out the coins 1964 or

earlier for they were silver, take the
rest back and get another roll. It was
making money from money, as
Aristotle had remarked.

I had bought several bags or 1965

Canadian pennies. I lucked out and
had rolls of what was considered to
be a rare variety, that even today
are valued at $20 each up to over
$700 depending on the quality. My
mother would wonder why people
would fly in to buy a roll of pennies
for so a few thousand dollars.

26
 om
l.c
By the time I was 17 and allowed to drive, I went and bought an Oldsmobile 442

gm :
for and paid cash $3,000. It was delivered to my home a few days before I even

ai
s@ by
got my license. When my father came home and saw the car, he asked whose
car was it? I said mine. He said no bank would give
on d

you a car loan without him signing. I said I paid

.li se

cash. It was at that moment when my family

began to see I was actually making money with
et a
je rch

this coin hobby.

When I was 13, my family took me to Europe for

Pu

the summer. I suppose I always had an

independent streak in me. I got a job at the local
coin store in the Pennsauken Mart to earn money
for the trip. It taught me a lot, not just about coins,
but economics and life. People were clamoring
for gold coins back then. You could sell gold in
coin form provided they were dated
prior of 1947. Austria and Hungary
were issuing gold coins dated 1908
known as restrikes to circumvent US
laws. Mexico issued its gold coins
dated 1947 to be able to sell gold to
Americans. Then there was a viable
market in US $20 gold coins as well.

27
 om
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gm :
ai
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I believe it was that family trip to Europe that impressed me the most and
probably shaped my destiny. Aside from seeing the history firsthand, my father
on d
bought a Volkswagen bus that we drove around Europe and I was the navigator.
.li se

Traveling in all the countries from Sweden down to Italy, I would have to change
my money with each border we crossed. It exposed me to the world of foreign
et a

exchange.
je rch

But perhaps because I had the eye of a

trader looking for patterns, I would see the
Pu

currencies rise and fall. To me, the world

was in a constant state of flux which I
found extraordinarily fascinating.

My father, being a conservative man, had

convinced me that I should become an
investor rather than a speculator. I knew
nothing about stocks. I thi8nk it was a life
insurance salesman who came over and
was also pit6ching mutual funds. I bought
virtually the high in the best performing mutual fund in 1966 which was Fidelity
Trend. I watched it drop from the $29 level to the $18 trading range by 1970. I
asked my father if this was the way conservative people made their money?
Nevertheless, it was a lesson well paid for – it taught me about the business cycle
was in fact alive and well.
28
Because I was working in a coin store that was also a bullion
dealer in those days, when I was in my first year of high school,
the history professor brought a film in that day entitle the Toast
of New York. This was about the Gold Panic of 1869 when Jim
Fisk was trying to corner the gold market prior to the return to
a gold standard after the American Civil War.

The Toast of New York stared Edward Arnold and Cary Grant,
which portrayed the gold manipulation of Jim Fisk that
resulted in the Panic of 1869, his perception of the world was
changed forever. This was the Panic when the term “Black Friday” was coined

om
because the mob stormed Wall Street and was
dragging the bankers from their offices and

l.c
hanging them. The riot prompted troops to be
sent in to restore peace.

gm :
ai
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The scene in this movie which captured my
on d
attention was when the character Jim Fisk is
.li se

reading the prices of gold from the tickertape

and says gold hit $164. Because I worked in
et a

that store, I was well aware that gold was $35

je rch

in the 1960s. This shocked me but at first, I assumed it was just a movie.
Nevertheless, it bothered me. I went to the library and looked up that date of
Pu

the Panic of 1869 in the New York Times and there it was in black and white –
gold was quoted at $164.

29
 om
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ai
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This was perhaps the event which set me in motion on to a career of forecasting
and comprehending the Business Cycle. Clearly, something was wrong with the
whole linear thought process of economic history and what they were teaching
on d

me in school. I became captivated by this shocking revelation that there were

.li se

booms and busts, not just like the Great Depression

et a

they were blaming of corporate greed, but the

je rch

mere fact that gold could have been $164 in 1869

yet $35 in 1965 called into question in my mind the
Pu

entire paradigm they were teaching.

The book I had to read in school, The Great Crash

by John Kenneth Galbraith (1908-2006) which was
published in 1955. It ignored any events that took
place prior and it was focused on blaming the
private sector. Something did not seem right. It did
not fit the facts. Years later, I came across Herbert
Hoover’s Memoirs in an antique bookstore in
London. When I read it, I was totally shocked! There
was all the documentation about the Sovereign
Defaults in 1931 by just about every European country, Asia, and South America.
It was the total destruction of capital formation. Galbraith never mentioned
anything about governments defaulting. That did not support his socialistic
philosophy.

30
 I came to see cycles in the history. I had
not come to the idea by studying
anyone else. The idea of business cycles
was begrudgingly acknowledged back
then but they were dismissed as just a
curiosity if that. We lived in a new era of
Keynesian Economics where government
was the master of the universe and
would protect us. After all, we would
have drills to hide under our desks in case
of a nuclear attack which would surely

om
protect us.

l.c
Consequently, I pursued my own
investigations into the Business Cycle

gm :
ai
s@ by unaware that others had attempted to
do so back in the 1880s and during the
on d
1920s. They had really been silenced with the Great Depression as the world ran
.li se

into the arms of Keynesian Economics.

et a
je rch
Pu

I had stumbled upon a list of panics in a newspaper pre-1929 which began with
the Ottoman Invasion of Vienna in 1683, the capital of the Holy Roman Empire.
Little did I understand at that moment that because this was an international list,
rather than domestic, it was actually capturing global capital flows. I took the
span of years which was 224 and divided the number of events 26 and arrived
at 8.6153846…. which was a simplistic average. I did not notice at first that this
was like the Pi calculation being nearly infinite.

31
 om
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gm :
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.li se
et a

In trying to map history to this as well as current market trends, I discovered the
je rch

structure was fractal. In other words, the frequency would build in intensity and
produce major events as distinguished from minor shifts in trend. Being a history
Pu

buff, I immediate began to look for its application historically.

Having worked in a coin store, I was

familiar with the cycles in coins again
both in the rise and fall of gold standards
and the rise and fall in the quality of the
coinage often known as debasement. I
began back testing through history and
was shocked to find that this frequency
had operated for millennia. The more I
explored, the more convincing this 8.6
frequency was becoming. I even noticed
that the dramatic fall in the coinage of the Roman Empire took just 8.6 years
from a silver content of 50%+ to virtually zero.

32
 om
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.li se
et a

In my research, I stumbled upon this chart in the Wall Street Journal published on
je rch

February 2, 1932 just a few months before the low.

"The above chart was sent to the Wall Street Journal by Edward Rogers of
Pu

Detroit. Mr. Rogers states that it was found in an old desk in Philadelphia in
1902. The original drawing was much discolored. The desk was of a pattern
that indicated it was at least 40 years old.

"The author of the chart is unidentified and the circumstances lead Mr.
Rogers to believe that possibly the chart was made during the Civil War or
before. It is submitted to Wall Street Journal subscribers for what it may be
worth."

This piqued my interest and it was the first indication that someone else had
observed a possible business cycle. I kept digging to see if I could discover who
the author might have been. This quest led me to a farmer rather than an
economist. Farmers are well aware of cycles in weather and nature whereas
those in the Industrialized World believe we are in control of our own destiny.

33
This is why the very idea of cycle has always emerged
from the commodity side of the economy rather than
the business/economic side. The farmer was Samuel
Benner (1832-1913) was an Ohio farmer who was
wiped out financially by the Panic of 1873 and a hog
cholera epidemic. In retirement, Benner set about to
establish the causes and timing of fluctuations in the
economy.

om
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gm :
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.li se
et a
je rch
Pu

In 1875, Benner published business and commodity price forecasts for the period
1876 to 1904. In his book, charts were produced revealing an 11 year cycle in
corn and pig prices with peaks alternating every 5 and 6 years, cotton prices
also moved in a 11-year cycle, and a 27-year cycle in pig iron prices with lows
every 11, 9, 7 years and peaks in the order 8, 9, 10 years.

What Brenner put out here was a cycle of 18, 20, 16 which would repeat again
in that sequence being a total of 54 years. It was interesting that Brenner did not
see a fixed cycle but one of an oscillating trend.

34
 om
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ai
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A business card surfaced from a Denver businessman named George Tritch
on d
which claimed it was compiled in 1872 three years before Brenner actually
.li se

published his book in 1875. Curiously, the same sequence exists, and it was
extended back in time and forward. The dates he illustrates were:
et a
je rch

1783, 1803, 1819, 1837, 1857, 1873, 1891, 1911,

1927, 1945, 1965, 1981, 1999, 2019, 2035, 2053
Pu

Tritch offers no explanation as to how he arrived at this cycle whereas Brenner

issued a book documenting the cycles. Brenner was a farmer observing the
cycles in agriculture whereas Tritch created a hardware store. I also found it
curious that he claims to have compiled this in 1872 but his copyright is 1883.
With no explanation as to how he arrived at this cycle and the fact that it is
merely an extension of Brenner’s cycle, I believe it was not original.

Upon close inspection of the chart in the Wall Street Journal, that too seems to
be a copy of Brenner’s work where the minor high is all placed at the top of the
chart rather than at the midpoint. The 1927 high is moved to 1929 and the low,
which under Brenner’s formula would have been 1931 was moved to 1932 to fit
the current events of the day. I concluded that the real author was Samuel
Brenner who appears to have been plagiarized over time.

35
 Obviously, I discovered that I was not
alone. But what I did discover was
that there appeared to be even a
cycle to analysis. I later came across
Kondratieff and others, but they were
all pre-Great Depression. What was
rising to the surface was that
Keynesian Economics had become
the new age of thinking that
maintained that the Business Cycle
was NOT inevitable and that

om
government could manipulate it and control our destiny thereby eliminating the
entire boom bust cycle eliminating recessions.

l.c
These journeys into trying to understand that there were booms and busts which

gm :
ai
s@ by
they seemed to ignore and pretend that government would prevent that from
ever happing again, shaped my life. My father had wanted me to follow in his
on d
footsteps into law. But I was captivated by trying to figure out what made the
.li se

world really tick.

et a

Disappointed that I did not want to

je rch

become a lawyer, my father pushed

me into computer engineering. He
Pu

saw the future in computers where I

was rather indifferent. I went to a
specialize engineering school set up
in those days by RCA much like
Microsoft does today. I complied to appease my father who said I had to do
something since he was concerned about me becoming just a trader.

My professor was terrible at teaching. We lost about 2/3rds of the class within
the first three months. Even I had tons of notes and was considering just dropping
out. He would show us a mainframe computer that would fill a room and said
before we could graduate, we would have to know ever part and how it
functioned. Finally, he put up an And/Or circuit. It hit me like a ton of bricks. A
computer was just constructed on 8 magnets which formed a bit and millions of
these became megabits. The complexity of designing a computer became
child’s play. He should have just started from there instead of top down.

36
RCA had sold its computer division to IBM and Univac. They thought the
computer would be like the radio and the prices would only fall. They believed
they were selling the high. They kept the servicing contracts because they had
all the government installations. The married guys were offered all the nice spots.
I was offered Thule Greenland, Guam, or Vietnam. I decided I did not want to
stay in the computer engineering side. I like the design aspect, but creativity
would no longer exist at RCA, so I declined. They were one-year gigs paying
even up to $50,000 but you had to remain there for one year, so they were tax-
free. My father was not very pleased with that decision. I returned to trading.

om
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gm :
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.li se
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je rch
Pu

Franklin National Bank was once the United States' 20th largest bank. It collapsed
on October 8th, 1974. It so happened that one of its executive VPs was a friend
and client of mine. The float exchange rate system of Bretton Woods collapsed
on August 15th, 1971. In 1972, Michele Sindona (1920-1986), an Italian financier
with reputed connections to the Mafia and Vatican banking, bought controlling
interest in the bank. Sindona was alleged to have siphoned off money and led
the bank into massive losses in the foreign exchange markets and ever-riskier
attempts to recoup. I was called in to look at the foreign exchange for there
was nobody who even understood the risks of the floating exchange rate
regime. The truth was rather simple. Nobody knew what the currencies would do
and there were no hedging programs even contemplated. So, it was easily to
claim he was a Mafia man and tried to just defraud depositors.

37
 om
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I was the only person around who seemed to have any clue about foreign
.li se

exchange in the early 1970s. I ended up with institutions coming to me for help
just out of word of mouth. Even at the peak in gold in December 1974, the
et a

Europeans were buying the high because gold was to be legalized on January
je rch

1st, 1975 and the “assumed” Americans would be pouring in to buy gold.
Pu

I warned them that I did not see and lines and warned that anybody who
wanted to buy gold in the United States had long been buying the coins. I sold
all my gold positions simply because I
did not see on the ground what they
were all claiming would happen. I
quickly became known as the gold
forecaster as well. The bottom of the
wave was coming in January 1977, I
had negotiated a lease for 10 years
without an inflation clause. They
assumed we were headed into a
depression and this was the first time I
used the Economic Confidence
Model myself.

38
 om
What was fascinating was that the 1977 turning point had been correct not just
for my personal busi9ness decisions, but it also marked the bottom in book value

l.c
as a percent of the high in the Dow Jones Industrials post-Great Depression. I

gm :
ai
could see in the data that the confidence in government was giving way to
s@ by
what would become a Private Wave beginning in 1985.
on d
.li se
et a
je rch
Pu

I was making markets in gold for all the dealers back then. I provided forecasting
on a daily basis using my models and they got that for free as long as they sold
their purchases to my firm. After gold peaked in 1980, I wanted to retire and
gave everyone ample notice to find another market maker. That is when they
wanted me to keep providing the forecasting. They offered $2,000 an hour just
for consultation.

39
 om
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gm :
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.li se
et a
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Pu

By June 1983, the world had gotten out that I was an adviser. The Wall Street
Journal called and pretended to be a future client. They really did not know
what to ask for so I simply said I assumed they were calling for someone else
and it would be best for them to call for there was nothing I could advise on
with such a vague request.

That is when the journalist, Joseph Perkins, revealed he was from the WSJ. He
asked if I was the most expensive adviser. I said I had no idea. He asked if he
could talk to my clients. I said probably, but he could not use their names. He
agreed. He called clients in several countries. He called me back and said if you
charged $10,000 an hour, they would pay it.

40
 om
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gm :
ai
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on d
I did not reveal back then that because I had a background in computer
.li se

engineering (hardware & software) I has seen back in the 1970s that I could write
a program to analyze markets. Of course, that was too Sci-Fi for people back
et a

then, so I never revealed I had created a computer system I had named

je rch

Socrates. I had always been impressed with his story how the Oracle of Delphi
had declared he was the smartest man in Greece. His effort to prove the Oracle
Pu

wrong, only proved it to be correct.

However, in the process, Socrates made many enemies for making the best and
brightest of each field appear less than brilliant. The common thread that ran
between them all was not just their own arrogance, but their inability to see
beyond their own field of expertise. For this they put Socrates on trial as the man
who knew too much and ordered his execution.

Socrates' argument that the great statesmen of Athenian history have nothing
to offer in terms of an understanding of virtue enraged Anytus who became.
Socrates’ most zealous prosecutor. Plato tells us that he had previously
threatened him: "Socrates, I think that you are too ready to speak evil of men:
and, if you will take my advice, I would recommend you to be careful."

Lycon was a great orator, which Socrates also held in low regard as to the status
within society. Meletus, was a poet, who initiated the prosecution against

41
Socrates, although most scholars consider him to a "puppet" of Anytus. It was
the affidavit sworn out by Meletus that made two related charges against
Socrates: "refusing to acknowledge the gods recognized by the State and of
introducing new and different gods" and "corrupting the youth."

Socrates spoke his mind against the corruption within the political leadership. In
Plato's Gorgias, Socrates accuses poets and orators of flattery and says that they
move only women, children, and slaves. Thus, all three men hated Socrates
personally and they took their revenge.

So too I find myself strangely opposing the corruption within governments.

Perhaps I too am tempting fate as did Socrates. Nevertheless, I named my

om
computer in his honor. Socrates is the achievement of gathering the collective
knowledge of the human race

l.c
and learning in a cognitive
manner the causes behind the

gm :
ai
s@ by
real trends of the rise and fall of
markets, economies, city-states,
on d
nations, and empires.
.li se

Socrates stands as proof that we

et a

are on the threshold of a

je rch

completely new dawn. This is I

hope will prove to be the next
great advancement in our
Pu

comprehension of the world

around us. We are so close
standing on the very threshold of
the Age of Reasoning &
Awakening. All we need to do is
take that step forward for
humanity by comprehending that
not merely is the world not flat, but
we are all connected in ways far
beyond our imagination.

42
 om
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gm :
ai
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This is a journey or quest for understanding that just for once, perhaps we need
not constantly repeat history. All we need do is shed ourselves of political
corruption and open the door to the future.
on d
.li se

Individually, we learn from our mistakes. Collectively, society does not retain
knowledge, but each generation appears to set out destine to create the same
et a

mistakes over and over again.

je rch

The problem with forecasting remains human bias, prejudices and assumptions
Pu

as we have seen with the Ferguson Model. This is the number one problem as to
why forecasts have always failed.

To forecast we cannot afford to ignore

the interconnections and attempt to
predict the future of a single market or
economy in total isolation. Everything is
connected. A politician cannot run for
office promising prosperity in the
middle of a global collapse.
Forecasting markets or the economy
also cannot be accomplished in total
isolation. All politicians do is promise change and always seek to divide and
conquer turn classes of people against one another.

43
 Analyzing the Brain

om
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gm :
ai
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S
.li se

o, how do we circumvent these major problems of myopic forecasts that

not only fail to understand the dynamic structure of the global economy,
et a

but the vital human elements so critical to our inventions which are
je rch

imagination, curiosity and creativity. Without imagination, we cannot ever come

up with a solution to anything. It is imagination which is the essence of discovery.
Pu

This feed our human curiosity and that ultimately leads to human creativity.

Devoted investigations, exploration of knowledge, and how it is attained in

relation to the information process boils down to data processing in all systems
of all kinds, regardless of whether we are talking about a human, animal, or
machine-based knowledge acquisition. Yet how can a computer make a
rational decision if it also lacks imagination?

True Artificial Intelligence Systems must acquire knowledge, remember that

knowledge, and deploy it in the future without predetermined rules (e.g. if interest
rates rise sell stocks) and without human bias. That results in a serious
confrontation with people clinging to their biases as well as the very way politics
is operated under the Republican systems of representative government rather
than actual democracies where the people vote directly rather than a
representative.

44
 Moreover, real Artificial Intelligence must
incorporate imagination, curiosity and
creativity. Unless one has imagination, there is
no possibility for change. The imagination
therefore leads to curiosity where all discovery
is made in any field. After accomplishing that,
we then need the talent of creativity to bring
our thoughts into reality.1

To accomplish Artificial Intelligence, there

emerged this presumption to map the brain

om
without understanding how it actually functioned would somehow produce the
holy grail. This led so many down the path of Neural Networks.

l.c
IBM’s Watson was simply a giant Neural Network. I have explained before that I

gm :
toyed with Neural Networks back in the 1980s and quickly saw that it would lead

ai
s@ by
nowhere. Real Artificial Intelligence is something that learns and analyzes on its
own to create its own conclusion. You cannot just throw in every piece of data
on d
you can find, shake it up, and pour out a perfect solution. These people have
.li se

just assumed that there are all these connections 100 billion neurons—with 100
trillion connections—and they assume that consciousness merely emerges
et a

magically. These theories deny the existence of the soul or any divine hand in
je rch

the creation of things.

Pu

1 The true scope of the subject spans the entire range of interests from classical problems in the philosophy of the mind

and psychology into issues in cognitive psychology and sociobiology. This involves the actual mental capabilities of a
particular species. Ideas that are related to the Artificial Intelligence field and computer science reveal, not so much
the answer of how to create AI, but how to distinguish what is NOT AI.

The primary emphasis is traditionally placed upon theoretical, conceptual, and epistemological aspects of acquiring
knowledge. Then we turn to reasoning which many expect will emerge from that data set. This introduces a very fine
line, which distinguishes problems that are empirical, experimental, and methodological over time. We need to employ
imagination, curiosity and creativity, but it must be tempered and controlled within reality. Otherwise, we can or cannot
achieve our aspirations.

There are many aspects to Artificial Intelligence that distinguish both input and output. The output must reach something
that, at the very least, matches the human ability to reason without the expert system structure of a predetermined result.
Then the input must be broad enough to cope with humans in order to communicate. So, there must be an ability to
determine what you are feeding into the system as information to acquire knowledge and experience in order to
comprehend the result reached. To achieve this, interaction must be comprehensible and that also requires introducing
language to be able to communicate but the system must understand what words really mean.

45
Yet there is far more lurking being these connections in the human brain. Most
people believe we generally use only 10% of our brain’s capacity. That is not
true. The majority of the brain is almost always active.

It was an article published in a 1907 edition of the journal Science, psychologist

and author William James argued that humans only use part of their mental
resources. However, he did not specify a percentage. Later, the 10% figure was
referenced in Dale Carnegie’s 1936 book How to Win Friends and Influence
People. The myth was described as something the author’s college professor
used to say. With modern MRI scanning, we know that the entire brain is always
active.

om
Nevertheless, aside from this myth that
consciousness will suddenly appear if we

l.c
create enough connections is again never
been proven to be even remotely some fact.

gm :
ai
s@ by Yet there is another aspect of the brain which
Neural Networks are incapable of even
on d
contemplating: How not only does the brain
.li se

function, but how and why do we dream? This

even involves the subconscious ability to
et a

imagine.
je rch

There are many theories about WHY we

dream, but no one knows for sure. Some researchers say dreams have no
Pu

purpose or meaning. Others say we need dreams for our mental, emotional, and
physical health. According to research, a significant percentage of the people
who appear in dreams are known to the dreamer.

That does still not answer HOW do we dream? Dreams are hallucinations that
occur during certain stages of sleep. They're strongest during REM sleep, or the
rapid eye movement stage, when you may be less likely to recall your dream.
Much is known about the role of sleep in regulating our metabolism, blood
pressure, brain function, and other aspects of health.

If we cannot possibly answer these two basic questions, then how is it possible
to think we can create a Neural Network and it will somehow miraculously be
the perfect forecasting tool?

46
The idea behind IBM’s Watson could search the entire internet and gather every
piece of information possible and the answer would spring forth. That was the
easy part. What IBM lacked was the expertise in how to do research. It never
even considered the three most crucial elements - imagination, curiosity and
creativity. How to create a computer with such human traits?

om
l.c
gm :
ai
s@ by
on d
.li se

Neural Networks were a great hope that somehow you just throw in all this
et a

information, shake well, and out will magically appear the answer. The
je rch

presumption was that our minds are just supercomputers and they ignored
perhaps the critical understanding of what makes one person brilliant at math
Pu

and another a brilliant artist who can’t balance their bank account. Clearly,
there was an entire world of the undefined aspect of what makes us – us.

This theory that our minds are simply supercomputers ignored these critical traits
of imagination, curiosity and creativity and how to they ultimately distinguish
one person from another. The theory
behind Neural Nets of just stuffing in all
this knowledge and somehow it will figure
it all out was it itself just a hallucination
from a dream state. This spawned
wonderful imaginative movies of then
somehow the machine would come to
life and decide it wants to rule the world
and take over humankind. Of course, it
would have to be evil.

47
 The Quest for the Holy Grail
or Finance

om
l.c
gm :
ai
s@ by
Like the medieval legend of the cup used by Jesus at the Last Supper, and in
on d
.li se

which Joseph of Arimathea received Christ's blood at the Cross, has inspired
many quests and movies based upon the search for this object. In finance and
et a

economics, there has been a similar quest for the model that will predict the rise
je rch

and fall of nations that reduces to a single equation. This too has led to major
panics and financial disasters.
Pu

Such attempted model systems have always failed because they confine it
to a single time series and then lack a true historical data for back-testing
beyond a couple decades. Additionally, like the Ferguson Model, they are
instinctively coded using a presumption about how the subject functions to
begin with rather than trying to explore something which is complex and cannot
be reduced to a simple equation.

The Capital Asset Pricing Model of the 1960s became a joke. The Efficient Market
Theory produced nothing that was in anyway even worthwhile. These interesting
theories and variations thereof had indeed led to the Black-Scholes attempt to
create an equation to rationalize the markets without actually comprehending
what they are. They succeeded in driving the markets and the economy off a
cliff creating false confidence and huge bailouts in 1998.

48
There is probably no greater example in finance than the failure of the Black-
Scholes Model which was a mathematical equation for pricing an option
contract. In particular, the model estimates the variation over time of financial
instruments. It assumes these instruments (such as stocks or futures) will have a
lognormal distribution of prices. Using this assumption and factoring in other
important variables, the equation derives the price of a call option.

Black-Scholes pricing model is largely used by option traders who buy options
that are priced under the formula calculated value and sell options that are
priced higher than the Black-Scholes calculated value.

The equation was developed by two economists, Fisher

om
Black (1938-1995) and Myron Scholes (b 1941). They
won the 1997 Nobel Memorial Prize in Economic

l.c
Sciences for the equation that created the Long-Term

gm :
Capital Management Crisis of 1998 and the Orange

ai
s@ by
Country debacle in California. That led to the book
entitled: When Genius Failed.
on d

From the Black-Scholes model, one could deduce the

.li se

formula, which gives a theoretical estimate of the price

et a

of European-style options. The formula led to a boom

je rch

in options trading and legitimized scientifically the

activities of the Chicago Board Options Exchange and
Pu

other options markets around the world.

However, it was widely used, although often with adjustments and corrections,
by options market participants. Nevertheless, many empirical tests have shown
that the Black–Scholes price is "fairly close" to the observed prices, yet there are
well-known discrepancies such as the "option smile" as it became known. The
fatal flaw was the assumption there would always be a market. During the 1998
Crash, market-makers withdrew and liquidity collapse causing the model to fail.

In 1986, Goldman Sachs hired Fischer Black of Black-Scholes fame for valuing
the stock options. It was Robert Rubin, later Secretary of the Treasury, who
brought in Fisher Black to create formula to trade options. The problem they had
was the new embedded options within debt. But the issue they did not
understand what they were now walking into. Unless you have been a trader,
you will never see the subtlest of the market idiosyncrasies that go missed by the
casual observer.

49
 This was a model failed
and created the Long-Term
Capital Management crisis in 1998
because the data used for
developing the model was only
back tested to 1971 when the
floating exchange rate system
began.

Models that only function within the

“noise” level will work for a period

om
of time and then totally fail. If you
do not test something on at least
the Great Depression, how can you expect that model to even survive such an

l.c
event?

gm :
ai
s@ by
It is IMPOSSIBLE to change the long-term trend in any market or economy.
Everything is connected. To really make gold suppressed, you have to do that
on d
to all commodities. Create deflation when the central banks are trying
.li se

desperately to create inflation without success, is asking for a nightmare.

et a

Then there was the

je rch

formula of David X. Li
that was used to create
the mortgage backed
Pu

securities and by the

main credit rating firms
who strolled down that
same path to oblivion.
The problem with these
types of formulas has
been rather consistent –
they are never tested
beyond at best perhaps
30 years with of history.
Unless you back test something extensively and match it against market liquidity,
you are doomed to failure.

All of these models were created by people who had no trading experience or
comprehension of how global capital flows drive markets not ascertainable from
50
 myopic domestic models and
analysis. The idea that markets
are efficient insofar as they are
always a reflection of fair value
is just absurd. The swing between
two extremes always exists like a
pendulum.

These excuses are clearly made

by the very people who look to
justify their “theory” behind

om
some trend even when it fails.
The markets move collectively.
There is no single trend in an

l.c
individual market which can

gm :
ai
s@ by move counter the global trend
for global market will arbitrage it
into its proper place within the
on d

general scheme. In other words,

.li se

gold cannot rise in dollars and

et a

decline in all other currencies.

je rch

Those denominated in other

currencies will arbitrage gold
and sell it to the dollar-based
Pu

investors expecting it to rally.

Models will typically fail because they are one-dimensional. They seek to forecast
a single market in total isolation. This is the number one reason for failure.

We are all behind the collective

movement of the global economy and
that includes the average person who
does not even trade or invest. The rest
focus on unemployment, GDP, trade, etc.
and respond to what? To the trend of the
whole, which is the common person on the
street. While many like to point to the 1%,
the 1% cannot dictate the trend when the
99% percent move in the opposite direction.

51
The Complexity of the Global
Economy

om
l.c
gm :
ai
s@ by
on d
.li se
et a
je rch

I
t is true that if we all sequester ourselves every flu season we can beat even
the common cold. Yet the global economy is both complex and delicate.
Pu

The solutions proposed by the medical sector are complete unreasonable

for the global economy and they fail to understand that it is also very fragile. The
world economy is very much like a rain forest. Science has come to understand
that we cannot create a rain forest by merely planting a group of trees. There
are millions of species of bacteria and insects in addition to the thousands of
plants and animals that interact to form a balance within nature. We cannot
hope to duplicate a rain forest due to his lack of knowledge concerning such a
wealth of intricate variables interacting with one another to produce the final
balanced system.

The global economy is so interconnected that rash decisions in one part of the
world will have dire consequences in other countries. Some countries depend
upon the food supply from others. Shutting them down for fear of a virus that is
by no means substantially more serious than the annual flu can lead to mass
starvation and the spread of disease because of malnutrition.

52
 om
l.c
gm :
ai
s@ by
on d
.li se
et a
je rch
Pu

Unfortunately, everything around us works on a very myopic view. Politicians run

for office promising one thing or another and never deliver because they cannot
control the trend which is dictated by global events. We have sought to
maintain this prejudiced view of the world for we have ignored the cyclical
nature of events and the business cycle specifically. Additionally, we desperately
try to reduce events to a single cause and effect, which is never the case. The
answers always lie in the more complex dynamic structure that we seem to be
incapable of comprehending.

These two human mistakes not merely have blocked any investigation of the
cyclical nature of the world outside of physics and natural science, but it has
kept humanity blind to the complex dynamic global structure upon which all
things function. In other words, everything around us is constructed like a rain
forest. We may not see the intricate interconnected structure, but every species
affects the whole that is a synergy beyond the mere sum of the parts.

53
 om
l.c
gm :
ai
s@ by
on d
.li se
et a
je rch

Therefore, a drought in the United States will affect prices in Europe and Asia
even if there is no drought in those parts of the world. Poppy fields in Afghanistan
affect the drug trade in New York City and elsewhere. Changes in interest rates
Pu

to negative in Europe have sent capital fleeing to the dollar. The sheer number
of variables from weather, wars, political trends and coups set in motion such a
diverse set of complex combinations that the end result merely confuses the
majority and exposes that we truly live in a Complex Dynamic Adaptive System
that is beyond a single cause and effect or a single nation.

The only person to have perhaps stumbled upon this true nature of a what I call
the Complex Dynamic Adaptive System, was Adam Smith. Smith grasped the
essence of how the economy works which explained was the Invisible Hand.

“… he intends only his own gain, and he is in this, as in many other cases, led by an
invisible hand to promote an end which was no part of his intention. Nor is it always
the worse for the society that it was no part of it. By pursuing his own interest he
frequently promotes that of the society more effectually than when he really intends
to promote it.” id/ Book Four Chapter II

54
What Smith discovered was that each of us create the whole by pursuing our
own self-interests. Someone becomes a baker which relieves others of having to
bake their own bred freeing them to explore their own self-interests. Taking this
discovery from the individual level, we then see that governments will also always
pursue their own self-interests against the people.

om
l.c
gm :
ai
s@ by
on d
.li se
et a
je rch

Plato recorded the debate between Thrasymachus and Socrates. Indeed,

Thrasymachus proved to be correct. The different forms of government were
Pu

irrelevant. The claims of justice would always prove to be merely the will of the
various forms of governments for they too pursued their own self-interests.
Edward Snowden had to flee to Russia for exposing that the United States
government was spying on their own people illegally. Yet the whistleblower used
by the Democrats to try to impeach Trump was protected because he served
their own self-interest.

Therefore, what I define as the Complex Dynamic Adaptive System is

constructed on Smith’s observation at the very basic foundation of human
society. We will participate in what we call civilization as long as we all benefit
from it. Government become drunk with power and quickly begin to transform
into tyrants no matter what the political system for they pursue only their self-
interest. The dynamic structure becomes extremely complex when we then
realize that this is taking place on a fractal basis and permeates throughout
human society on every level.
55
 om
l.c
The book which helped to inspire the American Revolution was Common Sense
by Thomas Paine (1737-1809). He observed that governments forget that the

gm :
ai
s@ by
people are the true sovereign because it is the total productive capacity of the
people which forms the economy. The government looks upon the people as
on d
the economic slaves and forget that they are not the sovereign of the people.
.li se

It is this Complex Dynamic Adaptive System that is constructed upon Smith’s

Invisible Hand on a fractal nature. Just as each individual pursuing his individual
et a
je rch

self-interest produced the synergy which emerges creating both civilization and
the economy as a whole, is the very creation of our society that is far greater
than the mere sum of the parts.
Pu

For any hope of constructing a model to comprehend this complexity requires

a deep understanding of this Complex Dynamic Adaptive System. Only then can
we hope to catch a glimpse of the global economy in all its fascinating ways of
tormenting the minds and souls of those who seek to reduce it to a simple cause
and effect.

This was the key to why Marxism/Communism failed. It replaced this natural
mechanism with central planning that could never comprehend the reality of
this complexity. It is indeed that rain forest with billions of species of animal and
plant life that are intricately interwoven creating a Complex Dynamic Adaptive
System within nature. Welcome to the human world where we must learn the
same lessons.

56
 The Dream of Socrates

om
l.c
gm :
ai
s@ by
L
ife is a quest for knowledge. When there is nothing left to explore, it is time
to die. Being a history buff, it was clear that capital has always flowed
on d

from one region to another. The rise and fall of nations was truly the rise
.li se

and fall of the Financial Capital of the World. Athens rose as the financial capital
et a

of the world after the defeat of the Persia and peaked by 404BC. Its currency,
je rch

the Athenian Owl (silver tetradrachm)

became the first true international
currency recognized in Africa to the
Pu

upper most part of the Europe as other

nations imitated its coinage.

That was followed by the currency

introduced by Alexander the Great.
The coinage of Macedonia was
imitated even in Europe by the Swiss
and Celtic tribes. The coinage issued by Alexander the Great became a uniform
design like the Euro with mint marks as to which city state issued the coins just as
the Euro notes all bear which member issued the note.

Of course, the Greeks were conquered by the Romans. Here too their currency
rose to become the new world currency accepted throughout Europe and even
into Asia where the coinage was regularly imitated for hundreds of years in India.

57
 om
l.c
gm :
ai
s@ by
on d
.li se
et a
je rch
Pu

The rise and fall of empires, nations, and city-states can be seen throughout
history if we just follow the capital flows. Even when we emerge from the Dark
Ages, we begin to see internal capital flows within Europe as people were
attracted to the Tulip Bubble in Amsterdam during the 17th century. What most
people do not realize is that tulips were even trading on the exchange in London.

That capital flow bubble was followed by the South Sea and Mississippi Bubbles
which both burst in 1720. This showed how capital was still acting as it did during
the Roman Empire. Roman historian would comment how panic would run down
the Via Sacra in the Roman Forum on news of an earthquake in Anatolia (Turkey)
or how capital would flood to a new conquest seeking emerging market
investments.

58
Indeed, the South Sea and Mississippi
Bubbles of 1720 were emerging market
investment booms just as we still see
today. Capital has always rushed
around the world since ancient times.
It was Hammurabi who in his legal
code sought to regulate prices
because of wild speculations, interest
rates, and above all, he demanded
that every deal between two people
had to be written in a contract and

om
filed with the government. No longer
would there be disputes based on

l.c
hearsay.

gm :
ai
Since I was an American forecasting
s@ by
the trend of currencies from the 1970s,
I had gained a broad international
on d

client base. When I was going to open

.li se

an office in Switzerland, I went to lunch

et a

in Geneva with a client who was one

je rch

of the heads of a major Swiss bank. I

had created a list of European names
to call our company because I realized
Pu

that there was always some hidden

anti-Americanism in Europe.

I asked for advice as to what name to select and he asked me a question.

Name a top European analyst. I was embarrassed for I could not. I assumed I
was appearing like the typical arrogant American. He laughed and said there
were none which was why everyone was using my service. He explained that if
he was British it was always God Save the Queen, the French were always Viva
la Franc and the same in Germany.

He elaborated that it was seen as treasonous to ever say your currency would
decline when the politicians used the rise of their currencies as proof of their
good management. He said, “You don’t give a shit if the dollar rises or fall!” It
was my unbiased view which was why I had risen to the top of the foreign
exchange advisers.

59
 om
l.c
gm :
ai
s@ by
on d
.li se

During the mid-1980s, OPEC was the big thing. All that money was being
et a

managed out of Geneva. A client and friend was Jack King who lived in Tokyo.
je rch

Jack kept telling me to open up in Tokyo and I was hesitant. I finally agreed if
Jack was going to run it. I had no idea how many clients were actually had in
Pu

Japan. Jack had finally got me to agree to fly over. When I did, many of the top
brokers I had known from the early 1980s in Geneva dealing with the OPEC
money were there in Japan. When I got there, they all wanted to take me out
on the town and basically say about time I showed up.

What I began to notice running around the world was that indeed capital rushed
around the globe in search of the next investment. However, the talent also
traveled around the globe. Ashley Warren who runs the European operations I
met in Tokyo when he was running the trading desk for one of the big Japanese
banks.

Capital has always been in search of the next trade. It has constantly rushed
around the world creating the capital flows and helping in the cause of creating
the rise and fall of empires, nations, and city-states. It was this first hand
experience that was behind my dream to create Socrates to monitor the world.

60
 Creating Socrates

om
l.c
gm :
ai
s@ by
on d
.li se
et a
je rch

W
hile in the late 1970s I was developing a program to monitor markets
are and forecast the financial moves, computers were on the rise. IBM
Pu

issued its XT in 1981. I can’t remember how many I bought, but it was
quite a few. I was doing my best to run forecasting, but it often had to run on
several computers back then. As computer expanded, so did the capacity to
program and expand the database.

While I did research at Princeton

University at the Firestone Library where I
came across that list of panics that
changed my life, for foreign exchange, I
did the research at the Royal British
Newspapers Library based in Colindale in
North London until 2013. They had all the
newspapers that I used to gather price
quotes on currencies going back
hundreds of years.

61
 So, while I was able to write
programs and run them on
multiple computers. I would have
to take the results of each and
then merge them on yet another
computer. It was sort of a manual
style mainframe. Of course, today,
desktop computers are faster
than the mainframes of the 1970s
and the storage facilities are
beyond comparison

om
I set out to construct a model that was free to explore the world and to return
like a dog in a game of go fetch. It proved to me it was making some profound

l.c
discoveries that people are too prejudiced to ever see. I appeared with Walter

gm :
ai
Bressert who was a good friend of mine I believe in 1982 or 1983 on Financial
s@ by
News Network in California which began in 1981 and became CNBC in 1991. I
gave the forecast on the British pound that it would fall from $240 to par by 1985.
on d

The host turned to Walt and asked about that outrageous forecast. Walt said he
.li se

would never bet against my

et a

computer. Walt was mainly into the

je rch

commodities. We did a join forecast

together Agrics in the Nineties.
Pu

I had to develop speech capability

back then just to be able to
communicate because it was
making what I thought were
impossible forecasts. I worked with
Dragon Systems in the early ’80s
when the speech was all hardware.
I needed to be able to inquire how
it came up with such a forecast as it
did on the British pound. For it has
also projected that the politics would flip (i.e. Margaret Thatcher) and that the
British economy would invert and align more with the USA against continental
Europe. That prediction seemed to be really off-the-wall. I inquired: why?

62
 om
l.c
gm :
ai
s@ by
on d
Socrates showed a correlation with the discovery of North Sea Oil. In 1970, British
.li se

Petroleum made its first discovery of commercial oil in the large Forties Field,
although oil was not produced until 1976. By 1974, it was apparent that North
et a

Sea oil could provide a massive source of energy, and also revenue. The
je rch

computer picked up the capital flows and determined that the British economy
would align with the United States as it was becoming a commodity-linked
Pu

economy.

I learned from observing the world economy and having such a diverse
clientbase around the world, they forced me to look
at every problem from their currency perspective. I
recall giving a conference in Geneva where I was
asked about the Swiss franc and then later about gold
by a Canadian. It was quite clear that the advice had
to differ depending upon your currency perspective.

The complexity was erupting and indeed I thought of

Adam Smith how each would act based upon their
own self-interest. The more international I became, the
more the clients demanded analysis to fit their
currency.

63
 om
l.c
gm :
ai
s@ by
on d
It became clear from history that just as Roman historicans remarked how panic
.li se

would run down the ancient Via Sacra (Wall Street of Rome) on news or a natural
disaster where they had lent money, the wild cards would always be some
et a

natural event, war, or political coup. Even the 1906 San Francisco Earthquake
je rch

cause the capital flows to rush from insurance in the East to the West leaving
cash shortages and undermined the banking system in New York setting the
Pu

stage for the Panic of 1907 which led to the creation of the Federal Reserve by
1913 with 12 branches to manage the capital flows domestically.

It was World War I and World War II that

sent the capital flows fleeing Europe as
tanks road down the streets. Where Britain
was the financial capital of the world in
1914, it was entirely broken by the end of
World War II. It not merely lost its empire
with independent movements everywhere,
but the United States ended up with 75% of
the world’s gold reserves and the dollar
became the new dominant currency upon
which the world would turn instead of the
British pound.

64
Then there were great plagues which also disrupted the economy of nations
histyorically. The Black Death killed 50% of the European population. This resulted
in a shortage of labor and landlords began competing oiffering wages bringing
an end to serfdom.

The Black Death also gave rise to private lawyers who were needed for the
inheritance of property. The amount of land and gold did not change, so
inflation emerged because the wealth of individuals on average rose per capita
as the population was halved. In 1362, a petition was filed in the English House
of Commons blaming the inflation on workers "who refuse to bear the burden

om
of poverty patiently" to justify freezing wages. It was the Black Death where we
draw the line as the very beginning of capitalism when people began to earn

l.c
wages,

gm :
ai
s@ by
on d
.li se
et a
je rch
Pu

The words to the rhyme “Ring around the Rosy” are a famous children's game
which has its origin in English plague history. The historical period dates back at
least to the Great London Plague of 1665 (bubonic plague) and most likely
extends back even further to the Black Death of the 14th century. The symptoms
of the plague included a rosy red rash in the shape of a ring on the skin ( Ring
around the Rosy). Pockets and pouches were filled with sweet smelling herbs (or
posies) which were carried due to the belief that the disease was transmitted by
bad smells. The term "Ashes Ashes we all fall down" refers to the cremation of
the dead bodies! The later Plague of 1665 end only with the Great London Fire
of 1666.
65
 om
l.c
There were about eight civilizations that all collapsed

gm :
ai
s@ by
ending the Bronze Age with the exception of Egypt post-
1250 BC. It was caused by a major shift in climate that led
to droughts which resulted in the widespread famine that
on d

inspired migrations/invasions. This event of 1177BC was the

.li se

Bronze Age equivalent to the fall of Rome, for they both

et a

were followed by a Dark Age.

je rch

Many have attributed this collapse of the Bronze Age to

the Sea Peoples, which were most likely northern
Pu

Mediterranean mass migrants due to the climate getting

colder in Europe. Cline has put together a nice assembly
of sources, but he missed the climate change. He assumed there was a migration
southward. However, we can see the first dip to cold came about 1,800 years
ago. We can see that the all-time high temperature was about 3,300 years ago.

The collapse of the Bronze Age was mostly complete by about 1100-1000 BC.
Our computer has identified a 1720-year cycle beginning in the Dark Ages with
the fall of Rome in 476AD when the last pretend Emperor reigned (Romulus
Augustus (575-476AD)). Our model highlighted the cycle between the Dark Ages
of 1720 years which brings us to 1244 BC — right on target for the beginning of
the collapse of civilization.

66
 om
Climate has always changed. It is absurd that there are those who claim global

l.c
warming is cause by humans and the industrial age. The climate has always

gm :
ai
changed, and it is never the same from one decade to the next. These people
s@ by
fail to understand cycles and presume that whatever the climate may be today
should remain forever. Climate change has also impacted history.
on d
.li se
et a
je rch
Pu

Napoleon was defeated at Waterloo because of climate was only part of his
defeat. It was argued that because of the weather he delayed the use of his
canons. That was the theory reported by the BBC. However, that is Waterloo and
its relation to the eruption of the volcano Tambora. Our computer also in
correlating war and weather with the economy and it revealed that Napoleon
also lost when he invaded Russia because of volcanic eruptions.
67
 om
l.c
gm :
ai
s@ by
Napoleon began his invasion of Russia on the 24th of June 1812. He was no fool.
He waited for winter to be over. He was planning to take the city of Moscow in
July. Instead, his army was devasted by winter and global cooling thanks to a
on d

volcano. The Russians abandoned Moscow and set it ablaze. When Napoleon
.li se

entered Moscow, he assumed he would get an offer of peace. Nothing came.

et a

He eventually retreated and that was devastating. Napoleon had invaded with
je rch

680,000 men and retreated by November 1812 with only 27,000 effective soldiers
remaining.
Pu

There is no question about it. When we correlate everything, you begin to see
history in a whole new light. Napoleon was defeated by the Mini Ice Age. The
Hunger Stones also marked the year 1811 as a drought. While this is one year
prior to the eruption in the West Indies in 1812, there is what has been called the
1808/1809 Mystery Volcanic Eruption which seems to have set in motion a Mini
Ice Age during the early 1800s. This was a monumental volcanic eruption in the
VEI 6 range which appears to have taken place in late 1808. This event
preceded the 1815 eruption of Mount Tambora (VEI 7) which produced the Year
Without a Summer in 1816. Napoleon was defeated really by Volcanoes. This is
my concern for the future going into 2024.

Obviously, nature has also played a vital role in shaping history from migrations
to the reasons behind who wins and loses in wars. These are important inputs
that cannot be ignored in creating a model that will not be surprised by6 what
people call a Black Swan event.

68
The success of Socrates is entirely based upon the fact that it is NOT dependent
upon human assumptions for as this latest Coronavirus Crisis has proven, a faulty
assumption produces serious mistakes – Garbage in – Garbage out. You cannot
create a model that starts with a human presumption or bias as Neil Ferguson
created. It simply became his emotional decision assuming he was not paid to
create this panic as Hillary paid Christopher Steele for the fake Steele dossier on
Donald Trump. A lot of people have profited from Ferguson’s fake report that
500,000 British would die, and 2.2 million Americans would die.

Create a model that is hard-wired which assumes interest rates up and the stock
will crash will never work. That is not a model it is a flawed program that just

om
repeats human mistakes and prejudices.

Real Artificial Intelligence (AI) is not an expert system where it simply looks up

l.c
human conclusions. So many pretend to have AI but all they do is simply look

gm :
up predetermined conclusions. True AI must embrace all fields of data, war,

ai
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nature, and disease, not just
economic and financial, but it must
on d
also embrace imagination,
.li se

curiosity, and creativity. Real AI

must be capable of exploring new
et a

relationships and reason for itself to

je rch

see the changes that take place

and not be shocked by a Black
Pu

Swan. Only then can we rely upon

such computer programs.

I have never seen any Neural

Network accomplish any of these
criteria nor any Expert System for that matter which does not think at all. The
Neural Networks simply tried to mimic the construction of the human brain and
assumes that if you throw in enough data it will learn. Even IBM’s Watson failed.

Socrates is the ONLY fully functioning Artificial Intelligence system in the world
that is monitoring the entire global economy and all its components – PERIOD!
Money cannot buy everything in life. I turned down $500 million for Socrates
where it would have just provided analysis for a single user. I rejected the request
of the CIA to build a version for the US government. I offered to run any study
they asked and was told no they “had to own it.”

69
 Bringing Socrates to Life

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I
t was my personal dream to create a true Artificial Intelligence System to
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assist me in viewing the world in an instant. Something which would not grow
tired and would never forget to check all the variables. Nevertheless, as a
history buff, I could see the patterns over the centuries which were
responsible for why history repeats.

It dawned on me that as individuals, we learn from our mistakes and progress

throughout life. When we finally become old and wise, it is time to die. What I
suddenly realized was that the real object of my life’s work was not to simply
create a program to help me, but something that would survive me.

History repeats because collectively society is incapable to learning and

retaining knowledge. We must start over again with the passing of generally
three generations and this was the reason history repeated. The only way to
break that cycle and advance society was to take what I had learned over 50
years and create an Artificial Intelligence System that would evolve with the
times.
70
The end goal had to be the objective to replace me and standby to assist in
the darkest of times without the emotions that doom society so often. I had
learned from trading over the years that your worst enemy was always yourself.
You had to conquer your own emotions in order to survive. Otherwise, the

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inherent herd instinct within us all drives us to seek shelter and comfort that we
are safe because that is what everyone is doing.

l.c
Those herd instincts lead us to buy the

gm :
ai
s@ by highs and sell the lows because
everyone else around us are doing so.
To rise about the herd and be the
on d

person who sell the high and buys the

.li se

low takes unemotional dispassion not

et a

to panic and retain a clear mind

je rch

when everyone else is in a state of

panic.
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The dark side of humanity is the

prejudices we harbor. We have to
surrender that to the universe and be
willing to follow the logic and the
facts. Until then, humans are
incapable of emotionally evolving. This is why history repeats because the
passions of humankind never change through the centuries. Those who are the
naysayers will cling to their prejudices and they will always attack me personally
because they cannot confront the message. They prefer to obstruct the
acquisition of knowledge and are incapable of ever having an original thought.
They prefer to prevent the evolution of society just as they fought against the
idea that the earth was round.

71
 om
My approach had to include to teach Socrates HOW to analyze, not WHAT to
analyze. I created in the code as much of myself as I could without the human

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flaws that keep life interesting. I taught Socrates HOW to analyze and did not

gm :
leave that to the chance of a Neural Net that cannot be tested. I understood I

ai
s@ by
had to create a computer that would be capable of imagination, take that to
the next stage of curiosity, and then the final stage of creativity. That was the
on d

real challenge.
.li se

I then had to also teach it language so I could communicate with it to try to

et a

understand how it arrived at such a conclusion. I used my children to improve

je rch

Socrates’ language skills back in the 1980s. I wrote a program to have an

ongoing conversation with them. My daughter believed it was alive and would
Pu

bring her friends over to show them a computer that talked.

I taught it how to be a politician. Whenever the conversation went off into some
esoteric avenue, it would change the subject. It would remember your answers.
It would ask if you liked dogs or cats and if you had one, what was their name.
So, when she would return to the computer it would say hello, what’s new, and
BTW, how’s fluffy?

I pursued my study of history on my own. I turned to contemporary historians and

read them all rather than rely on academic scholars who would typically make
the mistake of judging the past by their understanding of modern times. For
example, Christians merely labeled the Greeks and Egyptians as pagans. I saw
through their false interpretations rather easily. The Greeks had all these so-called
gods like Poseidon and Zeus, but there was never the idea that they were
actually the creators of the world and humans.

72
 The Egyptians actually believed in one god, the sun
god, Re (a form of Atum), who ruled over the earth,
where humans and divine beings coexisted.
Humans were created from the Eye of Re. This
happened when the eye separated from Re and
failed to return.

In both cases, there were multiple deities, but these

were seen more like saints in charge of specific
domains. If you were going to take a voyage, yes
you would go to the temple of Poseidon and make

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an offering. But it was more like a prayer to please allow me safe passage. It was
not to worship him as your divine creator.

l.c
It became clear to me that you could not interpret the past based upon the
concept of our modern world. One of the funniest instances of such a huge

gm :
ai
s@ by
mistake was the naming of the city of
Philadelphia. They were obviously
on d
Christians and interpreted the ancient
.li se

past in that perspective. They came

across the Greek word – Philadelphos. It
et a

meant brotherly love. They took it in the

je rch

Christian sense that they loved their

brother as Christ has recommended.
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But the context was all wrong. In

ancient Greek it indeed meant
brotherly love, but in the context of incest meaning brother and sister. Hence,
Ptolemy II Philadelphos meant he married his sister.

The task was to approach history in a totally objective way. I could not interpret
the past based upon modern ideas. I had to collect whatever data was possible
from legal codes, population numbers, plagues, migrations, and above all
recreate the monetary system of the world from inception.

This was a tall task to say the least. But because I had worked in a coin store to
make money for that trip to Europe when I was 13, the experience taught me
not just about gold, but the rise and fall of coinage as well. I had made money
from the debasement of the coinage in 1964 ending silver and moving to
copper-nickel. I had seen this also in the coinage of many countries.

73
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I had learned about Sir Thomas Gresham (1518-1579) in economics class and his
maxim that bad money drove out good. The question of money supply and
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inflation was philosophically established with Gresham’s Law. But what led him
.li se

to that conclusion? Gresham worked in Amsterdam

et a

and witnessed the response to the debasement of

je rch

Henry VIII in England. His proposition that bad

money drove out good money from circulation was
one important observation.
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Because foreign exchange was simply calculated

on the metal content of a country’s coinage, the
process of debasement became important. The
foreign exchange rate would decline, and people
would instantly hoard the old coinage. Just as when
silver was removed from the coinage in 1964.
Therefore, not only did history repeat, it repeated because of the same reasons.
Humanity will respond in the same manner when face with the same set of facts.

While Gresham’s Law applied to debasement, what others never grasped was
that as a country debases its currency when on a metal standard, the money
supply actually contracts. People hoard the old currency, so this compels the
state to increase its output which in turn only fuels the inflation. Interesting
paradox.

74
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What was clear was that I had to reconstruct the money supply and the
monetary system in order to understand the full implications of Gresham’s Law
on d
which were never investigated in any of the economic textbooks I had to read.
.li se

The shrinkage of the money supply compelled greater production and in some
cases, this would lead historically to hyperinflation – but not always. We can see
et a

that Gresham became an adviser to Queen Elizabeth I (1558-1603).

je rch

While Elizabeth listened to

Gresham and tried to restore
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the coinage, it was impossible.

The money supply had been
culled of the higher content
coinage and it was now
dominated by the debased
coinage. Upon her attempt to
introduce the restore
currency, it was quickly
absorbed for she could not replace the entire monetary system.

In order to deal with the problem of foreign exchange where the English coins
were being discounted, Elizabeth introduced a two-tier monetary system. She
struck coins known as testerns. These were made for international trade and were
minted to be the equivalent of the Spanish silver coinage which has become
the dominant currency in world trade.
75
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gm :
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Silver had completely vanished from the Roman monetary system by about
268AD. It took 26 years for a similar attempt was made to restore silver coinage.
on d
The first coinage of Henry VII had lasted 26 years
.li se

(1509-1526). The coinage was instantly hoarded,

and the debasement began within 3 years.
et a

Eventually it was successful, but only because the

je rch

outstanding money supply had become merely

bronze.
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My reconstruction of the world monetary system

began to reveal the secrets behind how history
repeats. The true driving forces behind the foreign
exchange markets historically evolved and
changed based upon the monetary system itself.
During the precious metal-based period, the
value of coinages between nations was simply
the metal content. As modern paper monetary system, the value of a currency
became focused upon the international confidence in that political entity. The
value of the currency was not simply the monetary content. This became evident
even in ancient times as the dominant currency was imitated by surrounding
peripheral nations be it the Athenian silver tetradrachms, the silver tetradrachms
of Alexander the Great, or the silver and gold coinage of Rome and then
Byzantium.

76
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Precious metals simply replaced commodities over time from cattle, sheepskins,
grain, shells, and then bronze. First, they were just weighed. Then the weights
Pu

became standardized. Next came geometric designs. Finally, the king of Lydia
took over to guarantee the coinage stamping his symbol which was a lion head.

While the often say that the first profession was prostitution and the second was
lawyers to make sure she was paid, somewhere in that lineage was the foreign
exchange dealer or moneychanger. Here is one of the earliest coins minted and
it has nine countermarks struck signaling
that the coin had been certified by a
dealer, so he need not have to keep
checking it as it passed through his hands.
With nine such countermarks, we can see
that there was a viable foreign exchange
business circa 600BC and obviously people
were counterfeiting the coinage from the
very start.

77
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Reconstructing the Roman Monetary System was perhaps the easy part. The
je rch

Romans were great secretaries. Because the Roman Republic was born in 509BC
by overthrowing their Tarquin kings, it was unacceptable for them to ever again
accept a king. When the Roman Republic became an oligarchy and the people
Pu

cheered Julius Caesar (100-44BC) to overthrow the corruption led by Cato the
Younger (95–April 46BC) and supported by Cicero (106BC– December 7, 43BC).

Even after Caesar spared many

their lives, they conspired against
him and assassinated him in the
Senate on the Ides of March, 44BC.
We can confirm the date because
the Romans used the reverse side
of their coinage like newspapers.
The Assassin Brutus issued his silver
Denarius proclaiming he kill Caesar
on that very day.

78
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Subsequent Roman Emperors pretended to be elected not much different than

career politicians today who are there also for life. The coinage of the various
emperors is thus dated for us with titles that pretend they were elected each
year. We can see this coin from Domitian shows it was struck during his 11th year
as Consul, which had been a Republic position for one year. Thus, he is
pretending to have been elected

Because the Roman emperors pretended to be elected, it has been possible to

recreate the Monetary System of Rome. We can then map out the rise and fall
of the silver content of the Roman denarius and the gold content of the aureus.
This allows us to see the actual course of debasement in the Roman monetary
system.

79
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However, because the dies created to strike the coins were all handmade, we
on d
are able to determine the number of dies used for each issue. We know from
.li se

experiments that about 15,000 coins can be struck from a die before it breaks.
Therefore, recording the number of known dies and
et a

multiplying that by the average number of coins that can be

je rch

struck from a single die, we can then extrapolate the money

supply over the course of time.
Pu

We can then look at the impact of the growth of the money

supply on an accumulative perspective as well. In this manner,
it becomes possible to reconstruct the monetary system of the
Roman Empire so
we can gain a clear picture of just
how Rome rose and fell without
getting all caught up in the bias of a
particular predetermined conclusion.
Therefore, it becomes possible to
actually see how empires, nations,
and city states rise and fall.

80
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When I reconstructed the Roman Monetary System, what jumped out at me was
on d

the fact that the silver content collapsed rapidly from 260AD into 268AD in a
.li se

short period of just 8.6-years. Upon investigating the contemporary historians, it

et a

became clear. Emperor Valerian I (253-260AD) was captured and turned into a
je rch

royal slave by the Persians. This sent a shock wave through the Roman Empire
which suddenly instilled fear into the hearts of Romans who suddenly saw that
their empire was vulnerable.
Pu

Additionally, other barbarian tribes suddenly saw that Rome was indeed
vulnerable. They also began to invade from the North. The Roman population
feared the future and
began hoarding their
wealth. The Roman
economy was simply
imploding. Silver was
vanishing as people
hoarded and the
gold coinage was
reduced in weight. It
was a stunning
collapse.

81
The Romans never debased
their gold content, but they
did reduce the weight of the
aureus gold coinage. This
stands in direct contrast
where the silver coinage was
debased reducing the
weight and silver content.

While Rome eventually split

after moving the capital to

om
Constantinople during the
4th century, eventually the monetary reforms under Anastasias I (491-518AD) is
where coin collectors tend to begin the distinction for the start of the Byzantine

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coinage. However, the official date for the fall of Rome in continental Europe

gm :
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was 476AD, 15 years before.s@ by
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When we turn to the Byzantine Empire (476-1453AD) which was the eastern
survivor of the Roman Empire, here we see that they debased the gold coinage.
The gold began to be debased during the reign of Nicephorus II Phocas (963-
969AD) when the costs of his wars made him unpopular because of his taxes.
82
During the reign of Nicephorus II Phocas, he introduced a new light-weight gold

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coin reflecting the inflation and the high cost of his wars. This was known as the
Tetarteron which was distinguishable only by its reduced weight. However, the

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metal content was also debased reducing it from 24k gold to just 22k.

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Gold had vanished in Europe. It did not reappear until the 13th century. For nearly
600 years there was no gold coinage and the silver coinage tended to be highly
localized. Curiously enough, researching the monetary systems of the world we
see great periods of upheavals and vast swarths of economic periods of
complete collapse typically fostered by economic mismanagement.

83
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I also included the monetary system of Asia. Japan offered a very interesting
example of the abuse of power. As each emperor came to power, he
demonetized the outstanding money supply decreeing that they were now
worth only 10% of his new coinage. The constant issue of a new coin with its
value being decreed as worth 10 times that of the old coinage ruined the
economy and undermined the integrity of the state.

84
This practice created the incentive to rely upon barter. Coinage simply fell out
of use much as was the case with the fall of Rome. Government’s assumption of
the power to decree value of coinage (fiat) only produced an accumulative
inflation during the Nara Period and early Heian Period that remains one of the
highest in history. It would have been as if government printed a new one-dollar
bill and declared arbitrarily that all one-dollar bills dated today are worth 10 old
one-dollar bills. You can imagine the economic confusion this introduced.

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Money was clearly not a store of wealth. The people returned to a barter system.
Tangible goods with some utility value never really fell out of use namely rice
and silk. Coin production stopped for about 600 years until 1587. Some foreign
coins appeared from China, Korea and Annam (now part of North Vietnam)
during this period right up until the Meiji era (1868–1912), but this was minimal
reflecting international commerce, not domestic.

The government fiscal mismanagement contributed greatly to the loss of

imperial power. It was the collapse of the Monetary System in Japan that led to
the rise of the Samurai period. This was a valuable lesson that Socrates learned
from the data and it applied to all cultures.

85
We learn individually from experience. Unfortunately, as a society, that
experience is lost with each third generation beginning anew. We constantly act
out in the same sequence of events because human nature does not change
giving substance to the realization that history repeats because the passions of
humanity never change.

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Therefore, my goal became quite create that only a computer that would learn
je rch

from history and accumulate experiences that extended beyond a mere three
generations was vital if we were ever to advance as a society. Ironically, we are
arrogant and always assume we are progressing in culture so there are no
Pu

lessons worth investigating in history.

We do not learn very much from the lessons of history is perhaps the most
important of all the lessons of history. Technological progress has merely provided
us with more efficient means for going backwards. Idealism is the noble toga
that political gentlemen drape over their will to power. The endemic belief
behind socialism/communism has been the belief that the whole is more
important than the one. Therefore, the cornerstone of the human condition
under such theories has always been that the choice of the individual is
secondary to the benefit of the whole, which inevitable becomes the state.

86
 Quarantine & Panic

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D
uring the 1918 Spanish Flu, the responses of the Public Health
.li se

Departments in Europe and in the United States were based on the

et a

ideas that were prevalent in society and in the scientific community at

je rch

that point in history. They sought to ground their actions in the current scientific
concepts, which were clearly traced back still to Medieval times which included
plagues and pestilence.
Pu

Sanitation, vaccination programs and other public hygiene efforts in the late
19th century enabled public health officials to gain power and authority.
However, the Influenza Pandemic of 1918-19 challenged the public health
agencies. The massive mortalities from the common illness of influenza were
mysterious and frightening. Many of the measures formerly known to work were
ineffective. They were not prepared for an event of this magnitude, lacking the
organization and infrastructure and constrained by the war. Yet, the great war
provided the rhetoric of nationalism necessary to usher in these authoritative
responses and losses of liberty. The people were pre-conditioned to accept the
authoritative quarantines unlike today.

The public health authorities at this point in time relied on fundamental measures
to control epidemics which had dated back to Medieval times of the Bubonic
Plague. They attempted to reduce the transmission of the pathogen by

87
preventing contact – self-distancing. They framed their public health orders in
scientific ideas of their understanding of how the influenza microbe would
spread through the air by coughing and sneezing. Since they concluded that
the pathogen was transmitted through the air and masks become the common
deterrent. Public gatherings and assemblies were seen as a potential origin for
the transmission of the disease. The public health authorities believed that good
ventilation and fresh air were "the best of all general measures for prevention,
and this implies the avoidance of crowded meetings." This translated into the
controversial and imperative measure of closing of many public institutions and
banning of public gatherings during the time of an epidemic.

om
Today we see people being
arrested and fined. Neighbors are
encouraged to report on each

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other in Britain. The rigidity of these

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regulations back in 1918 varied
s@ by
greatly with the decision making
of the local health departments
on d

and severity of the influenza

.li se

outbreak in that region.

et a

In the United States, the

je rch

Committee of the American

Public Health Association (APHA)
Pu

issued measures in a report to limit

large gatherings. The committee
held that any type of gathering of
people, with the mixing of bodies
and sharing of breath in crowded
rooms, was dangerous.
Nonessential meetings were to be
prohibited. They determined that
saloons, dance halls, and cinemas
should be closed, and public
funerals should be prohibited
since they were unnecessary
assemblies.

88
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Churches were allowed to remain open, but the committee believed that only
the minimum services should be conducted, and the intimacy reduced. Street
cars were thought to be a special danger to society because they had poor
ventilation. The committee encouraged the staggering of opening and closing
hours in stores and factories to prevent overcrowding and for people to walk to
work when possible. The response was strikingly different among the many
countries. The differences seemed to be the question over the very concept of
what and how a contagion would unfold. Some believed that science had
progressed enough that the death toll of previous plagues was long since
passed.

89
 The Second Wave

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T
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here is a strong likelihood that we will experience a second wave during

the next flu season 2021/2022. Many who will have contracted the virus
this time, but it is minor, will have developed an immunity for the next
season. The only way this will impact those individuals will be if it mutates further
and becomes a slightly different virus next year. This raises deep concerns that
once government as been able to seize great powers with this flu season, they
will never hand them back and we may find public gatherings curtailed in the
name of public health.

There was quarantining during the Spanish Flu. Quarantine in the 14th century
through the early 20th century really focused on the protection of the
community at the expense of the victims of illness. Society quickly began to
demonize people as they did with “Typhoid Mary” (Mary Mallon (1869-19348).
Typhoid Mary was an Irish-born cook believed to have infected 51 people, three
of whom died, with typhoid fever, and the first person in the United States

90
identified as an asymptomatic carrier of the
disease. Mallon was held in isolation for three years
between 1907 and 1910. She was released and
forbid to be a cook. In 1915, Mary started another
major outbreak and was tracked down. She was
imprisoned for the rest of her life.

In the last 50 years, the civil rights movement in the

United States has brought to the forefront human
rights and the dignity of vulnerable populations. This
is still in conflict with the ideas of public health. Now

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we have this idea that it is unjust to confirm people
with the disease, so now we confirm the entire
population. What is clear is that disease has always

l.c
spread between continents because of travel. Syphilis, which is a bacterial

gm :
ai
infection, was common in America among Indians which then infected
s@ by
Europeans who took it back to Europe. Likewise, Europeans brought deadly
viruses and bacteria, such as smallpox, measles, typhus, and cholera, for which
on d

Native Americans had no immunity.

.li se

The 1918 influenza pandemic was the most severe pandemic in recent history. It
et a

was caused by an H1N1 virus with genes of avian origin. The virus spread
je rch

worldwide during 1918-1919. In the United States, it was first identified in military
personnel in spring 1918. It is estimated that about 500 million people or one-
Pu

third of the world’s population became infected with this virus. The number of
deaths was estimated to be at least 50 million worldwide with about 675,000
occurring in the United States.

Those infected were quarantined in their rooms, unable to communicate with

the outside world. Even one person infected within a family meant that the rest
of the family segregated themselves from that one member. New York City
warned that to avoid exposing others in their community to the disease, they
had to self-quarantine. They would tie a white scarf to the door warning that the
influenza was within.

It was September 5th, 1918 when the Spanish Influenza first appeared with
returning sailors from aboard at Boston’s Commonwealth Pier. The Influenza
quickly spread to New York and by September 17th, it was appearing in
Philadelphia. When the first few civilian cases were reported on September 21st,
in Philadelphia, they refused to cancel the upcoming Liberty Loan parade which
91
was scheduled for September 28th celebrating winning the war. The parade
attracted hundreds of thousands of spectators. The patriotic procession of
soldiers, Boy Scouts, marching bands and local dignitaries stretched two miles
through downtown Philadelphia with sidewalks packed with spectators. It took
only 72 hours after the parade, when all 31 of Philadelphia’s hospitals were full
and 2,600 people were dead by the end of the week.

Later investigations found that this influenza was not particularly deadly by itself.
It appeared to infect many also because of malnutrition during the war and the
rise in the price of food had impacted the health of many.

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When the second wave hit during the 1918/1919 Flu Season, it was brought back
by returning soldiers first in Boston. It was this period where the most deaths
seemed to take place. They subsided and the market rallied again and topped
out with the 1919/1920 flu season. It is more likely that we will see another wave
next year. However, this should be less that the current wave based upon
historical data.

Nevertheless, we should realize that the governments will most likely use this as a
new power to prevent public assemblies which coincidently restricts protests.

92
 Flattening the Curve

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T
et a

he sales pitch for locking down the world is that we must flatten the curve
je rch

which seems to be a simplistic and logical concept. People have

understood this graphic faster than they have about the virus itself. But
the way this is being deployed raises serious questions. It is the same manner that
Pu

they have sought to push climate change – anyone who dares to disagree is
ignorant and reckless and are henceforth ostracized from society.

They then employ this idea of social distancing which was present during the
1918-1919 Spanish Flu pandemic. This also seems logical, but it provides more of
an illusion of control over this virus. So, since there is no vaccine, social distancing
to achieve flattening the curve becomes the newly accepted norm. But politics
is also involved where the left is immediately demonized Trump and the right
using this for political gain and could care less if it is effective or the
consequences to the economy going forward. They are clearly hoping to keep
us locked down for as long as possible to simply win the election. But then what?

What exactly will unfold if they ever do lift this quarantine? What liberties will be
surrendered forever as took place with 911? This is exactly 19-years later which
in and of itself is interesting. 19 years before that was the 1982 Latin American

93
debt crisis which disrupted the banks and 19 years before that was 1963 when
John F. Kenney removed silver from the coinage and then he was assassinated
on November 22, 1963. Then 19 years before that was the birth of the IMF and
19 years before that was 1925 and the turning point for Europe which began its
slide into default by 1931. The cycle interval before that was 1906 San Francisco
Earthquake which led to the Panic of 1907. So, was this just a time for a crisis?

What is curious is that without a vaccine, then the minute we try to resume
normal living, the virus starts to spread all over again. There will surely be a
second wave next year. Does this contagion support the authoritarian power to
prevent civil unrest in the future?

om
Whether we are exposed now or two months from now, the odds are extremely
likely that we will all be exposed at some point. Some of us will have just a mild

l.c
various and others with perhaps other diseases will suffer the worst as is the case
with the flu. Then there are mutations of the virus, which starts the process all over

gm :
ai
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again as is the case with the annual flu. The reality of this dilemma is that
government is really committing to this policy of quarantine until a vaccine can
on d
be developed.
.li se

Of course, there is the claim that we must quarantine else we will overwhelm the
et a

health care system. China simply expanded its hospital space in a matter of
je rch

days. We take the opposite approach. Lock everyone down and don’t expand
the hospitals. That really does not make sense.
Pu

If we look at China as a timeline, they are just now trying to emerge from a
lockdown of more than two months. If this holds true, then we may see the
economy implode until June. What if China has a second wave while we are in
the middle of our quarantine? Will our government keep us locked down? It
seems to also involve politics. I they think they can defeat Trump by doing so,
they will find any excuse to keep it going at tremendous rise of civil unrest.

With the economy stages for a major collapse in the 25% level of GDP and companies
like Macy’s already furloughing 130,000 employees, the damage will be long-lasting.
What about all the people losing their jobs in the third world? India is locking down for 3
weeks when it has only 1,000 cases. We are running the risk of major food shortages
and that will lower the resistance people normally have making the disease much more
dangerous when coupled with malnutrition.

94
 How to Destroy a Civilization
by Self-Distancing

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T
hroughout the ages there have been often periods where society is
divided into groups which then justify suspicion and often hatred. A friend
Pu

was sick with Tonsillitis so she was coughing. She was getting hate emails
for sending her child to school and people immediately assumed she
had the coronavirus. The hatred which spilled out from other mothers showed
how easily it is to divide and conquer society. It brings to mind Julius Caesar (100-
44BC) and his famous quote: Divide et Impera (divide and rule). Today, it may
be better known as divide and conquer.

This policy which governments are carrying out of self-distancing has a very
dangerous undertone. It is making people suspicious of everyone around them.
Throughout history, this is the most destructive trend possible is when you turn
brother against brother which goes back to the story of Cain & Able. This is what
government is doing to society instigated by the medical profession which is
ignorant of both the economic destruction they are carrying out as well as the
wounds they are causing withing society that will not vanish overnight.

95
There has been a dangerous side effect to religion which includes this aspect of
self-distancing. Of course, there are the major division of Christianity, Judaism,
and Islam. There are often cultural walls that prohibit intermarriages. We find
similar taboos in Mexico where still Mayas only marry Mayas. There are wounds
from wars where Japanese and Chinese do not mix or marriages between
French and Germans.

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Pu

In England, the hatred from the Civil War remains and Catholics are still called
Popish (Popery) and Papist (Papism) which are archaic words for Roman
Catholicism, used by Protestants and Anglicans to label their Roman Catholic
opponents. They beheaded the king because he was Catholic, and then Oliver
Cromwell put his portrait on the
coinage claiming he was now
the Lord Protector as if he was
king. The Puritans outlawed
Christmas, all sports, and made it
a crime to kiss your wife in public.

The hatred within Christianity

between the various sects where
protestants were against
Catholics has been a long saga. This was not confined to just England, but also
96
in Germany, north v Bavaria, and of course in Ireland. I remember as a kid waiting
for a bus and listening to people against John F. Kennedy becoming president
claiming he will obey the Pope. So, the hatred against Papes is not something
that has died. It will rear its head whenever the economics applies stress.

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When the economy turned down, there were riots against the Irish Catholic
immigrants that erupted even into gun battles in Philadelphia. The Irish were seen
as taking jobs and willing to work for less. We will see this in Europe as the refugees
have disrupted the balance of employment. It always becomes a division
withing society which is very dangerous. It can take place because of religion,
ethnicity, race, and gender.

Even within Judaism, there were division according to sects. It was explained to
me by a Jewish friend that Ashkenazic and Sephardic Jews represent two distinct
subcultures of Judaism. Ashkenazi Jews are popularly contrasted with Sephardi
Jews (also called Sephardim), who descend from Jews who settled in the Iberian
Peninsula, and Mizrahi Jews, who descend from Jews who remained in the
Middle East. I was told that a Sephardi Jew is looked down upon if they married
an Ashkenazi Jew.
97
Indeed, there is documentary evidence from 1735 where a Sephardi Jew
petitioned the King of Prussia to dissolve the marriage where his son, without the
permission of his father, married an Ashkenazic Jewish woman.

In Islam, the split into Sunni Islam, Shia Islam, and Kharijites, was mainly political at
first but eventually acquired theological and jurisprudential dimensions. There are
three traditional types of schools in Islam: schools of jurisprudence, Sufi orders
and schools of theology. This is the source of the hatred between Iran (Shia) and
Saudi Arabia (Sunni).

It is easy to see these invisible walls that separate and divide society based upon
their religion which have been used to justify bloodshed. This is at the root of

om
dividing society creating the dangerous trend of forming a foundation of what I
call Us V Them.

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The principle of Freedom of Religion was adopted by the Roman Empire in order
to build the greatest empire known to human history. The Romans may have
conquered many states, but they sought to expand commerce allowing the
people to retain their own customs and religion. They never forced Roman gods
upon any society. It is true they destroyed the Jewish Temple and carried the
religious artifacts to Rome. However, the Jews sought to separate from Rome
taking advantage of the end of the Julio-Claudian Dynasty. The Roman general

98
Vespasian had to crush the Jews for political reasons for to allow them to split
from the Empire would only lead to other states rebelling as well.

The Roman Emperor Elagabalus

(218-222AD) tried to bring his religion
from Syria to Rome. That did not go
down very well. They assassinated
him and dragged his body along
with his mother through the streets of
Rome. However, they nonetheless
respected the religious beliefs of

om
Syria and returned the black
meteorite known as the Stone of Emesa which he had paraded around Rome
in a Chariot depicted on his coins.

l.c
The social distancing may sound logical along with quarantines. However, it has

gm :
ai
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the serious potential of destroying the very key to why the United States rose to
the largest economy in the world
on d
because it was constructed on the
.li se

same principle as the Roman Empire –

freedom of religion. Philadelphia was
et a

the first city to establish the

je rch

Pennsylvania charter, which

welcomed all who “acknowledge
Pu

one almighty God.”

In contrast, Venice encouraged

people to report on the neighbors as
is taking place in Britain. If you see your
neighbor leave the house more than
once a day, see something, say
something.

The Venetian Mouth of Truth allowed

people to drop anonymous slips
accusing others of some crime. They were hauled in and presumed to be guilty.
That undermined the fabric of Venice society and am empire that lasted for
1,100 years (697AD-1797AD), declined and then simply fell to the French. Once
you break the bond of civilization, then the isolation destroys the very purpose
of civilization – the cooperation of everyone who then benefits from the whole.
99
 Infamous Johns Hopkins
COVID-19 Tracking Map

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T
his image of the spread of the Coronavirus comes from the now
infamous Johns Hopkins COVID-19 tracking map. What started as a data
Pu

transparency effort has now molded into a tool for hysteria and panic
which they have been promoting completely irresponsibly.

An important question to ask is what do

these bubbles even mean? Each bubble
represents the total number of COVID-19
cases per country. The situation looks
serious, yet we know that this virus is over
four months old, so how many of these
cases are active? But besides that, the
bubbles are not in proportion to the
respective populations. Take china for
example, the red bubble cover virtually
the entire country. There are 1.3 billion
people in China with only 81,250 cases
100
and 3,133 deaths. The graphic of Johns Hopkins University makes it look like you
should never even speak to someone from China even on the phone.

Johns Hopkins has created a dangerously misleading graphic system which has
struck fears in the hearts over so many and has resulted in the destruction of the
world economy. Immediately, we now see that just under half of those terrifying
red bubbles aren’t even relevant for they do not reflect the number of cases
within a population just the total number of cases which is less than 1% of the
populations it claims to be tracking. This is taking a single data point with no
context and then using it to literally terrify the entire world population. There is
no reference to time with respect to current cases. Their red bubble reflects

om
simply a historical view rather than currently active cases. This is highly
irresponsible.

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The United States is tracking on par with Europe in general, but it is lower than
what it was in China. Nevertheless, this perspective still exaggerates the crisis for
it does not reflect the impact on any weighted per-capita basis. It treats every
country as a single entity, as we will see this fails to tell us what is going on in
several aspects. On a per-capita basis, this means the USA would need to reach
101
19,110 confirmed cases to match China. The United States is still below 15,000 as
of March 23rd, 2020.

om
l.c
When we look at the number of cases on a per-capital basis, we can easily see

gm :
that the likelihood of a true epidemic appears extremely remote. An epidemic

ai
s@ by
requires a high proportion of society to be infected and is an event in which a
disease is actively spreading. That is clearly not the case with the coronavirus.
on d

since the proportion of society infected has not even reached 1/10th of one
.li se

percent of the population.

et a

The real concern is that there are other

je rch

coronaviruses which typically amount to

14% of flu-like diseases each year. This has
Pu

contributed to false-positive claims of the

coronavirus. With less than 15,000
reported cases in the USA, given that the
2018 population was 327.2 million, we are
talking about 0.00004% of the population.
If the number of flu-caused deaths
exceeds 7.7% of the total population, then
the United States officially has an
epidemic on its hands.

In contrast, the term pandemic relates to

geographic spread and is used to
describe a disease that affects a whole
country or the entire world. This has nothing to do with the proportion of the
population that is infected.

102
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All we hear from the CDC is that we must “Flattening the Curve” and thus their
recommendation has been to collapse the economy. This is exactly opposite of
on d
needs to be done for they clearly have ZERO understanding of the damage
.li se

they have done to the economy. The proper response was exactly what China
did – the constructed hospitals in a matter a day.
et a
je rch

This is all based on the CDC excessive projections focused as a shock to the
healthcare system which can increase fatalities due to capacity constraints. In
the long-term, they have decided
Pu

to destroy the economy rather than

increase the capacity as did China.

Both the CDC and WHO have been

optimizing virality and healthcare
utilization, while ignoring the
economic shock to our system. Both
organizations have completely
ignored the economy and the
impact of their recommendations.
There has been no check and
balance against their wild
projections which are clearly not supported by the data.

103
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Moreover, COVID-19’s sensitivity to UV light and heat is exactly like the normal
influenza virus), it is very likely that it will “burn off” as humidity increases and
temperatures rise. Tests have shown that Both heat and humidity significantly
Pu

reduced the ability of the virus to spread from person-to-person. This result is
absolutely consistent with the fact that the high temperature and high humidity
significantly reduce the transmission of influenza as well.

The reported cases as a function of latitude confirms that this is operating as a

normal virus. Influenza thrives in cold and dry conditions, which is why winter is flu
season for much of the northern hemisphere. Behavioral differences in winter
can also have an effect. All indications are that as the weather warms, this will
also pass. That implies a peak in April/May, but there will be a risk that it
reappears in a new version for the next winter season.

104
 The panic which has been
created and the policy of
shutting down the economy
has been suggested that this is
a plot to accomplish the
overthrow of both the Trump
Administration and the
German government by the
left which is also behind the
climate change which was
running into stiff resistance.

om
This illustration puts this in
perspective. The Black Death

l.c
of the 14th century created

gm :
ai
s@ byCapitalism ending serfdom for
with a death toll of 50%, there
was a drastic shortage of labor.
on d

Landlords began offering

.li se

salaries over and above the

et a

free housing and 20% of the

je rch

crop.

This Coronavirus is so
Pu

infinitesimal, yet we have shut

down the entire economy
which is akin to the economic
collapse of the Black Death.
No other pandemic or
epidemic has ever destroyed
the economy in this
magnitude. We just do not
sequester people for the flu
each year which kills hundreds
of thousands of people each
year.

105
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Indeed, when we look at the Coronavirus in comparison to other diseases, what

has been orchestrated is clearly disproportionate to the outbreak. There is just
no justification for what is taking place. We are either dealing with an
unprecedented level of incompetence in government, or a deliberate plot for
political gain. But whose’ gain? Europe, Democrats, or some diabolical plot
combined?

106
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Those sorts of questions concerning a political conspiracy were not relieved

when former British Prime Minister Gordon Brown urged world leaders to create
a temporary form of global government to tackle the twin medical and
economic crises caused by the Coronavirus. He is no fool. He knows once there
is the formation of anything pretended to be “temporary” it exists forever. Why
are these people so intent upon trashing our freedoms and converting the world
into an authoritarian paradise for them?

107
 European Political Coup?

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It is no secret that I have been very pessimistic about the fate of Europe. From
et a

the very beginning, to get Germany to agree, Helmut Kohl (1930-2017),

je rch

Germany's former chancellor, insisted that there would be no consolidation of

the debt. He denied the German people any right to vote on joining the
Eurozone because he admitted he would have lost.
Pu

Kohl admitted before he died that he acted like a

"dictator" to bring in the single currency to the country,
otherwise he "would have lost" had he held a
referendum (see Telegraph; 09 Apr 2013). He conceded:

"I knew that I could never win a referendum in

Germany," he said. "We would have lost a
referendum on the introduction of the Euro. That's
quite clear. I would have lost and by seven to
three."
Kohl described adopting the Euro was in his mind an
emblem of the European project, which he said would
prevent war on the continent. He further explained:

108
 "If a Chancellor is trying to push something through, he must be a man of
power. And if he's smart, he knows when the time is ripe. In one case – the
Euro – I was like a dictator ... The Euro is a synonym for Europe. Europe, for
the first time, has no more war."
When they were creating the Euro, the Commission attended our economic
conference in London that year. I met with them and explained for the Euro to
compete against the dollar, there had to be the consolidation of the debts. They
acknowledged what I was saying, but said they had to just get the currency
through first and then they would worry about the debts later. Of course, later
never comes.

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The Coronavirus is very convenient, I have made it very clear after working with
governments around the world for about 50 years, they will never let a good
crisis go to waste. Christine Legarde while at the IMF strategically threatened all
the tax havens that the would be removed from the Swift System unless they
gave up everyone who was hiding money offshore. She even threatened the
Vatican.

She has been advocating the consolidation of the debts because the ECB is out
of power. She has also been pushing the cancellation of currencies while at the
IMF proposing that each country should adopt their own cryptocurrency to then
force everyone hiding cash into the system to be taxed. She is using this current
crisis to advocate Corona Bonds which would be jointly issued by the EU which
is a very clever way to federalize Europe through the backdoor. The very idea
of coming up with Corona Bonds is becoming fashionable as if they will cure the
disease.
109
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The Euro has already had major selling pressure because of the philosophy
et a

against consolidating the debts has carried over into the no bailout policy for
je rch

banks for that would also result in cash flowing from Germany to bailout Italian
or Greek banks. With that in mind, American banks are reluctant to take on any
Pu

credit risk with European banks fearful that if they fail, whatever they are owed
will just evaporate. That led to the start of the Repo Crisis on September 17th,
2019.

These Corona Bonds at first glance appear attractive. Buys no longer have to
look at the individual credit rates of the member states and will look to the EU
as a whole as they do with US treasuries.

When we look closer, this will mean that the EU member states will get funds from
the EU to allow them to keep the Keynesian Model operating by increasing their
spending without raising taxes. Their national debts will not rise since they are not
the contracted borrower – that’s Brussels.

What is being glossed over is to do this means there must also involve a transfer
of sovereignty to Brussels. This has been long awaited federalization of Europe to
justify the huge bureaucracy in Brussels.

110
While in the United States the Justice Department is investigating lawmakers, who
sold their stocks ahead of the virus and was there any inside trading. In Europe,
I have firsthand information that elites sold not just their stocks, but all bonds with
the turn of the Economic Confidence Model on January 18thy, 2020. That was
not because they were reading our reports, but because they received a phone

om
call that told them to get out.

l.c
What is most interesting this time
is the fact that these elites

gm :
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simply were told to get out of
BOTH stocks and bonds. To
make this very clear, when
on d
.li se

stocks decline there is normally

the flight to quality which is the
et a

AAA government bonds. The

je rch

fact that this time the flight to

quality was to cash, clearly
Pu

warns what our forecasts have

been – this is a pending
Sovereign Debt Crisis intermixed
with a Liquidity Crisis.

There was the initial flight to

quality from the 1929 Crash. but
it was not as enthusiastic as one
would expect which failed to
reflect the drop-in interest rates.
The smart money smelled a rat
and they were correct. In 1931,
virtually all of Europe defaulted
on their debts, South America
and Asia.

111
 om
l.c
Here is the German DAX and the German Bunds. Many political elites sold on

gm :
the ECM not because of me, but because they were told to get out. Now what

ai
s@ by
is really strange is they sold bonds and stocks and went to cash. We can see
that it took more than 1 year before people sold everything and went to cash
on d

during the Great Depression despite the fact that interest rates declined. Here
.li se

we have the DAX collapsing, but note how fast the German Bunds collapsed.
They were selling not just equities, but all European bonds.
et a
je rch
Pu

Germany went on lockdown with remarkable speed. Social life has been
restricted as a consequence of Covid-19. The first restrictions began on March
8th, 2020, when the government banned events involving more than 1,000

112
people. Operas, theatres, trade fairs and sports events were closed or canceled.
On March 11th, 2020, the president of the European Central Bank warned that
the coronavirus outbreak will spark an economic downturn in Europe similar to
the 2008 crisis unless EU governments provide financial support for their
economies.

On August 15th, 2011, German Chancellor Angela Merkel's coalition partners

threatened to withdrawal from her government if she agreed to Eurobonds in
any form. The next year in June 2012, Angela Merkel buried any idea of euro
bonds at the summit tension said not in her lifetime. Then at the Chancellery in
Berlin on Feb. 14th, 2020. Angela Merkel signaled she may be open to

om
joint European Union debt issuance to help offset the impact of the coronavirus,
an apparent softening of entrenched German opposition that could transform
the finances of the 27-nation bloc.

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The political change that had to take place to save the Eurozone demanded
je rch

that Germany surrender its austerity policy. It has been Germany's policy on
austerity that was threatening Europe as a whole and it was Merkel's opening
Pu

the borders to refugees unilaterally without the prior consent of the members
that had justified even BREXIT.

It was Germany which was the first to put people on lockdown and this plot
appears to have been hatched in Europe to force the capitulation of Germany
to save the Eurozone. The heads-up was given to strategic people at the upper
echelons of politics, not including Trump, who has been selling all their
investments which INCLUDED BONDS! This is the smoking gun. This is the fastest
collapse in government debt that even offering Eurobonds will not fix the
situation.

We are looking at a political coup to federalize Europe on a grand scale to save

the EU. They have been feeding stories to the press to whip-up the panic and
they have counted on all those who love to dive head-first into conspiracies
who have now succeeded in even getting 13% of Americans who think that are
inflected and will die.

113
They are already instructing European dealers to stop selling gold to individuals.
They have been trying to shut down the supply of metals as an alternative. Banks

om
have been swamped with demands for cash dollars. I have direct information
that one central bank will propose that people deposit their gold and convert it

l.c
to a digital account to save the country. They are seeking to force the end of

gm :
paper currency and compel every European into a cryptocurrency

ai
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The EU has succeeded in getting Germany to yield and they will issue 1 trillion
Coronavirus Bonds. While they claim this is an emergency issue, it is opening the
door to the issue of Eurobonds which Germany has rejected since inception and
was a demand that no such debt would ever be issued, or Germany would
withdraw. This panic has achieved its primary goal - the federalization of Europe.
From our model perspective, this was mandatory to keep the Euro from
collapsing during the Monetary Crisis Cycle 2021-2022. It is debatable if this
measure will succeed for the damage to the economy of Europe may have
gone too far to ever recover to a viable political entity.

114
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The fact that we have key elites at the very top selling their entire portfolios and
et a

the only way to have saved the European Project was the federalization, this
je rch

panic presents too much of a convenient opportunity that opened the door of
the federalization of Europe. This also now justifies a European Army and it justifies
closing the borders to stop the
Pu

refugees for health reasons

which end the racism
allegations.

The real question is success.

Will they be able to forge this
federalization using the virus
to justify lockdowns? Are they
prepared for civil unrest which
may lead to the breakup of
the EU if this scheme fails?

115
 Is this a Political Coup

om
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T
his is a curious photograph that is circulating around by the Democrats.
The Democrats rejected Trump’s attempts twice to help the people in
Pu

the middle of this contrived crisis demanding legislation that had nothing
to do with the virus. Then we have states ordering total lockdowns when
the CDC recommends social distancing and stay in groups of less than 10.
Governors of states ordering total lockdown like that in Maryland are Democrats.
They are clearly going beyond even the CDC recommendations. They are
looking to score political points rather than help the people. This is very curious
to say the least.

There were a lot of elite people who were given the heads-up to sell +- 2 days
around the Economic Confidence Model (ECM) turn on January 18th, 2020. Not
that they even knew what the ECM was, but the decision marker on this
operation appears to have used it for the correct timing when everyone would
have been in a vulnerable position for the correction which we warned was
coming. Perhaps they were simply taking advantage of this turning point which
was a very strategic and important one at the end of the 8.6-year wave.

116
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The Ohio Department of Health said that over 100,000 people were infected, at
a time when there were five confirmed cases in the state. Some epidemiology
experts critiqued that estimate as too high, and the department’s director later
on d

said she was “guesstimating.” These people have created such a scare that 13%
.li se

of Americans think they are infected when it's the common cold or the flu. This
et a

is what is creating the burden in hospitals because of all the panic.

je rch

The newspapers have been fed with news to repeat. The New York Times ran a
piece on March 20th, 2020 with the headline: Coronavirus Could Overwhelm U.S.
Pu

Without Urgent Action, Estimates Say. A leader in creating this scare is Columbia
University who has been telling everyone 650,000 people might become
infected in the next two months. What they are not telling people is that their
estimates are inherently uncertain, and they could change as the virus naturally
declines with warmer weather.

These estimates do not warrant the total destruction of the economy that will
cause people to lose their homes, jobs, and lead to an economic depression
when unemployment rises to 20%. These estimates are akin to someone standing
up and forecasting the Dow will fall to 5,000 in two months. It is all guessing which
is inherently linked to emotions.

There is little doubt that the Democrats are trying to use this virus for pollical gain.
This is no longer about what is good for the country or the people. It is about
who wins in November 2020.

117
 What Makes a Recession a
Depression?

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F
rom a timing perspective, the Great Depression lasted from the peak of
the Dow Jones Industrial Index on September 3rd, 1929 to July 1932. The
timing is not really the defining moment. The true distinction between the
Great Depression and a deep recession turns on whether you destroy 20% of the
jobs and to what extent you undermine the capital formation.

In the case of the Great Depression, the unemployment soared because there
was a profound shift in employment. The introduction of the combustion engine
drastically altered agriculture. In 1900, about 40% of the civil workforce was
employed in agriculture. The invention of the tractor and other mechanical
advancements reduced the need for manual labor.

118
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Then the Dust Bowl struck, and this is what destroyed so many jobs that the
unemployment rate climbed to 20%. The solution was World War II. The people
had to become soldiers or retrain for manufacture. Those that could not make
the transition simply became the hobos of the era.

The destruction of jobs was unfolding because of the economic evolution that
Schumpeter called Creative Destruction, the advancement of a new technology
which destroys the former industry. We are also going through this right now as
stores are replaced by internet. Even the shopping malls in 2019 Christmas season
decline for the first time. We have this trend already set in motion. Many small
businesses will simply never reopen. They were already fighting against this
modern wave of Creative Destruction. This is why if unemployment exceeds 14%
we will see a retest of the 25% high of the Great Depression.
119
 om
This virus is perhaps our modern-day Dust Bowl. It presents a tremendous risk that

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in shutting down the global economy on the grand scale, it will take more than
two years to recover. We are probably

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looking at 2023-2024.
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The second factor that resulted in
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creating a Great Depression was the

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Sovereign Debt Crisis of 1931. Back then,

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the bonds of foreign countries were

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denominated in dollars and were listed

on the New York Stock Exchange. As
nation after nation defaulted on their
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debts, the capital formation was utterly

destroyed. The New York Investment
Bankers packaged and sold foreign bonds in small denominations to the general
public.

Many people were still conservative like Andrew Melon (1855-1937) who was
famous for taking the title of the top selling
book of 1926, Gentlemen Prefer Blondes, and
converting that to Gentlemen Prefer Bonds!

Today, we have about $12 trillion dollars of

sovereign foreign debt issued in Europe with
negative interest rates. The EU members are no
longer able to issue debt at these low levels of
rates. The solution is Corona Bonds.

120
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The issue of Corona Bonds is still not the consolidation of debts that was
necessary to create a true currency to compete with the US dollar. Each
member state will retain its debt that is already issued. This means the ECB will
be compelled to continue to roll the debt it holds and buy more.

The Corona Bonds are not going to save the day. They are simply a means to
extend the debt even further but it will not relieve the member states of the debt
crisis nor the ECB from trying to keep interest rates negative to prevent the
sovereign debt of Europe to simply default.

121
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The Great Depression began in the United States as an ordinary recession at the
end of the summer of 1929 following the peak in the Dow Jones Industrial Index
on September 3rd, 1929. The downturn became markedly worse during October
and reached an initial low in mid-November.

When we look at the

events, on Friday October
2nd, the bankers
attempted to support the
market. They had no
impact. The Dow closed on
the 25th at 30360 and on
Monday morning, the
market opened at 29520.
This failed attempt only led to a decline in confidence.

122
The market initially recovered into April 1930 rallying for 22 weeks. It was that
week on April 14th, 1930, was when in the United Kingdom, Chancellor of the
Exchequer Philip Snowden, presented tax increases on income, death duties and
beer. This exposed the philosophy of austerity that the decline in the markets
was presumed because of a too-loose monetary policy.

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On May 11th, 1931, the Viennese bank named Credit-Anstalt, which was founded
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by the famous Rothschild banking family in 1855, filed for bankruptcy. Credit-
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Anstalt was one of the most important financial institutions of the Austro-
Hungarian Empire, and its failure came as a shock because it was considered
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impregnable. The fact that it involved the Rothschilds sent shivers down the spine
of the financial world establishment and began a banking panic as confidence
collapsed.

Real output and prices fell precipitously. Between the peak and the trough of
the downturn, industrial production in the United States declined 47% and real
gross domestic product (GDP) fell 30%. The wholesale price index declined 33%.
Although there is some debate about the reliability of the statistics, it is widely
agreed that the unemployment rate exceeded 20% at its highest point. The
severity of the Great Depression in the United States becomes especially clear
when it is compared with America’s next worst recession, the Financial Recession
of 2007–2009, during which the country’s real GDP declined only 4.3% and the
unemployment rate peaked at less than 10%. The likelihood of this force
shutdown of the world economy will see a collapse in real GDP far worse that
the 2007-2009 fi9nancial crisis.

123
In all my career, I have NEVER witnessed such false propaganda used to this
extent with the objective of undermining the world economy in order to prevent
the collapse of some governments – namely the EU. It certainly seems to be
more of an issue crafted to lead to a massive seizure of power that the
government suddenly needs to protect society much akin to Homeland Security
following 911 when it is their very survival which is at stake.

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There is clearly a world economic depression that has been set in motion by
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these people. There are places where people work part-time and are now
without jobs or unemployment insurance. These people are ignorant of what
they have proposed and what they are doing to the entire world.

They are either complete idiots when it comes to economics and they have set
in motion an insane panic, or there has been a political agenda of the left to
craft political change at all costs.

You cannot shut down the world economy to simply stop the common cold. The
stupidity they have demonstrated is beyond belief and the press has run with
this and blaming any politicians who disagrees with these idiots. The best thing
that can take place is advertising revenue collapses, the journalists lose their jobs,
and the economy implodes which eliminates grants to people like this. You do
not yell fire in a theatre. This is what they have done.

124
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Even the economist Niall Ferguson has shown his political bias coming out and
bashing Trump when there is no justification for shutting down the world
economy. As an economist, he should know better. This only begs the question
why is he supporting a socialist agenda?

The Timeline
On January 8th, 2020, the Washington Post reporters Gerry Shih and Lena Sun
reported an outbreak of an “unidentified and possibly new viral disease in
central China” that was sending alarms across Asia in advance of the Lunar New
Year travel season.

Already, Taiwan, Hong Kong, South Korea, Thailand and the Philippines were

om
contemplating quarantine zones and scanning travelers from China for “signs of
fever or other pneumonia-like symptoms that may indicate a new disease

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possibly linked to a wild animal market in Wuhan.”

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These two reporters launched the coverage of the coronavirus and the disease
Covid-19 for the Washington Post.
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126
 The Civil Unrest

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T
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he occurrence of a natural disaster such as an earthquake, volcanic

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eruption, tsunami, flood, hurricane, epidemic, heat wave, and/or plague

increase the risk of violent civil conflict in a society. While a study by Philip
Nel and Marjolein Righarts entitled Natural Disasters and the Risk of Violent Civil
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Conflict attempted to interpret this as justification for action on climate change,

t5hey utterly failed to prove that the natural disaster were caused by human
induced climate change.

I have studied this subject from an economic perspective. I have found many
such events have connections to not just sudden natural disasters, nut periods of
extreme cold climates during solar minimum. Here, Nel and Righarts looked at
data for 187 events for the period 1950–2000 to systematically explore this
question that has received remarkably little attention in the voluminous literature
on civil war. They concluded that natural disasters significantly increase the risk
of violent civil conflict both in the short and medium term, specifically in low-
and middle-income countries that have intermediate to high levels of inequality,
mixed political regimes, and sluggish economic growth. Rapid-onset disasters
related to geology and climate pose the highest overall risk, but different
dynamics apply to minor as compared to major conflicts.
127
The findings of their study failed to show the link that the natural disaster was
human induced climate change. Nevertheless, they did manage to prove that
given a situation of rapid economic change, such events will increase the
incidence of various types of civil unrest. This does warn that politicians and
claimed health researchers should be mindful of the solutions they recommend.
They cure may be far worse than any virus. They are playing with fire and are
inviting social and political risks posed by these cataclysmic contrived events.

It is incredibly important to understand

that as the weather turns bitterly cold
in the north, people will begin to

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migrate south. This not merely caused
the ancient Greeks to become the Sea
Peoples bringing the Bronze Age to an

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end in 1177BC, but also during the Year

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without a Summer in 1816 which shifted
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the population in America.
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In the United States when in 1816 six
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inches of snow fell in June and every

month of the year had a hard frost,
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people began to migrate. The

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temperatures had dropped to as low

as 40 degrees in July and August in
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New York City during 1816. People also

called it ‘Eighteen Hundred and
Froze to Death’ and the ‘Poverty
Year.’
The Year without a Summer sent people fleeing from New England states in
search of warmer weather and fertile soils both south and west. It was the
weather that began to cause migration in the United States outside of the 13
original states. Thousands of New England families gave up their farms, packed
their belongings into wagons and joined the throngs traipsing over rivers and
mountains to Pennsylvania and the Ohio River Valley, which includes Ohio, West
Virginia, Indiana, Illinois, and Kentucky.

128
 Indeed, between 1810 and 1820,
Maine lost as many as 15,000 people.
Sixty Vermont towns lost population
during that decade as well. The
population of 60 other towns in
Vermont stayed the same while the U.S.
population grew 32%. When we
examine Massachusetts, we can see
that this state gained only 50,000
people from 1810-20, while Ohio
gained five times as many. The

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Massachusetts Legislature tried to hold
on to its citizens by passing a

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homestead act that gave settlers 100
acres of land for $5.

gm :
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s@ by Even during the American Revolution,
when John Adams set out to travel to
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Philadelphia, it was bitterly cold and

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there was a foot or more of snow that covered the landscape which had
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blanketed Massachusetts from one end of the province to the other. Beneath
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the snow, after weeks of severe cold, the ground was frozen solid to a depth of
two feet. Packed ice in the road made the journey very hazardous. In a letter to
his wife, John Adams wrote:
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“Indeed I feel not a little out of Humour, from Indisposition of Body. You know, I
cannot pass a Spring, or fall, without an ill Turn — and I have had one these four
or five Weeks — a Cold, as usual. Warm Weather, and a little Exercise, with a little
Medicine, I suppose will cure me as usual. … Posterity! You will never know, how
much it cost the present Generation, to preserve your Freedom! I hope you will
make a good Use of it. If you do not, I shall repent in Heaven, that I ever took
half the Pains to preserve it.”

On September 8th, 1816, Jefferson described the weather during the Year
without a Summer in a letter to Albert Gallitan:

We have had the most extraordinary year of drought and cold ever known in the
history of America. In June, instead of 3¾ inches, our average of rain for that
month, we had only 1/3 of an inch; in August, instead of 9 1/6 inches our
average, we had only 8/10 of an inch; and it still continues. The summer too has

129
 been as cold as a moderate winter. In every state North of this there has been
frost in every month of the year; in this state we had none in June and July but
those of August killed much corn over the mountains. The crop of corn through
the Atlantic states will probably be less than 1/3 of an ordinary one, that of
tobacco still less, and of mean quality.

While 1816 was the year we had a major volcanic eruption, it also came during
the Little Ice Age with Solar Minimum. Natural disasters have always had a serious
impact upon the people. What is overlooked by most is the fact that the
American Revolution also came during the Little Ice Age. The economy was
suppressed and the demand for taxes from England to fight wars produced the

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revolution very similar to the condition which resulted in the Nika Revolt in
Constantinople.

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A forecast that unemployment would rise sharply against was something that
was interesting but even I wondered how that would unfold back in 1998.
Unemployment was testing the lowest since the 1960s yet would swing up and
retest the highs of the Great Depression. This forecast that unemployment would
retest the lows going into 2019 and then rise into the 2023 period seemed to be
a slingshot up to retest the Great Depression highs. It did not seem possible.
130
I could not see fundamentally how the economy could collapse so fast. But low
and behold, fate has given us the Coronavirus scheme which I believe will have
destroyed more businesses and wiped out more jobs than any economic event
historically surpassing the Great Depression and war.

• Illiquidity exploded and hedge funds puked their guts out all over the
street. Even some bond funds in Europe and Sweden, as well as Denmark,
suspended all redemptions.
• The panic to the US dollar has been massive. This will only undermine
emerging market debt. The Fed can try to inject dollars, but this will have

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no effect since the demand far exceeds the supply.
• The fear factors the medical industry has created over Covid19 is

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unbelievable where 13% of Americans think they are infected. There is now

gm :
little doubt that this fear factor has overwhelmed the markets and the

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economy. Trump has delegated the response to the States, which may be
a mistake. Some states are overreacting and many have started to shut
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down their economies ordering people to stay home into the week of April
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6th. Universities have switched to online and many may have just closed
for the year. German chancellor Angela Merkel is in quarantine as in US
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Senator Rand Paul. A member of the Vice President’s team tested positive
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but not the Vice President.

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What we must realize is that the longer people remain locked down, the greater
the civil unrest. Even after infections begin ebbing, a secondary pandemic of
mental-health problems will typically follow. At a moment of profound dread
and uncertainty, people are being cut off from soothing human contact. Hugs,
handshakes, and other social rituals are now tinged with danger. People with
anxiety or obsessive-compulsive disorder are struggling. Elderly people, who are
already excluded from much of public life, are being asked to distance
themselves even further, deepening their loneliness. Asian people are suffering
racist insults, fueled by a president who insists on labeling the new coronavirus
the “Chinese virus.” Incidents of domestic violence and child abuse are likely to
spike as people are forced to stay in unsafe homes. Children, whose bodies are
mostly spared by the virus, may endure mental trauma that stays with them into
adulthood.

131
I wrote in the Cycyle of War Report back in 2017 that we were staring at a cycle
of rising civil unrest beginning in 2020. I previous wrote:

“The Irish Rebellion of 1798 followed the French Revolution. This event was
an uprising against British rule and lasted from May to September 1798.
The Irish Rebellion was part of the contagion that was influenced by the
ideas of the American and French revolutions. We must be vigilant
because the cycle for the possibility of such a revolutionary contagion
comes into play in 2020.”

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I further wrote:

“The Cycle of War, therefore, turned up in 2014 right on target. It has key
targets due where we can see bursts of activity with important volatility
starting in 2017. We still see tensions in Syria and in North Korea. There will
be another burst of volatility in this cycle come 2019. World War I began
in June 1914 and ended with Germany surrendering to Britain on
November 21, 1918, which was about 52 months in total duration (8 waves
of 8.6). The entire span of World War II was about 68 months in Europe and
98 months in Asia (just over 8 years). The overlap is interesting whereas
Pearl Harbor takes place in year two on the European scale but in year
four on the Asian scale. Either way, we are looking at the most intense
period for civil unrest by 2020, which lines up with the ECM.

132
 A Lesson of Authoritarianism

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T
he idea of contagion prompting quarantines and isolation actually dates
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much further back to the Justinian Plague (541-542AD), which also

originated in China and northeast India (Yersinia pestis). The plague was
carried to the Great Lakes region of Africa via overland and sea trade routes.
The point of origin for Justinian’s plague was Egypt. The Byzantine historian
Procopius of Caesarea (Procopius Caesarensis; c. 500-560 AD) of Caesarea (500-
565AD) identified the beginning of the plague in Pelusium on the Nile River’s
northern and eastern shores. The plague spread in two directions: north to
Alexandria and east to Palestine.

Procopius recorded the climatic changes taking place in southern Italy during
the same period where the climate was turning colder as it is today. He remarked
how there were unusual incidents of snow and frost in the midst of summer;
below average temperatures; and a decrease of sunshine.

133
Procopius documented of a major volcanic event at this time describing the
tumultuous period where the climate turned violent with a volcanic winter. There
was a mysterious fog that plunged over Europe, the Middle East, and parts of
Asia casting them into darkness. This catastrophic event lasted for 18 months. The
Byzantine historian Procopius wrote: “For the sun gave forth its light without
brightness, like the moon, during the whole year.” Temperatures in the summer
plummeted creating the coldest decade in the past 2300 years. Snow fell as far
east as China during the summer causing starvation as crops failed. The Irish
chronicles recorded that “a failure of bread from the years 536–539” took place.

The Justinian Plague coincided with the turn in the climate to solar minimum as

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we are experience currently. This is when disease does rise as crops begin to fail.
This turned the pandemic into an epidemic which affected nearly half the
population of Europe. This was comparable to the Black Death that came

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about 600+ years later (2 x 309.6).

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The Justinian Plague (541–542 AD) resulted in 5,000 deaths per day in
Constantinople, but the Emperor responded with massive taxation as the
pestilence swept the empire. Justinian is remembered for his legal code reforms,
but also for massive taxation for trying to restore the fallen glory of ancient Rome.
The plague wiped out most of the farming community and impacted the tax
revenue of the government. It was taxation that was different from the Black
Death. Here taxation was applied to individuals, whereas latter taxes were
minimal and applied only to landlords.

134
Justinian showed no mercy whatsoever when it came to the collecting his tax
revenue. Despite the human desolation, Justinian hunted the ruined freeholders.
He not only demanded they pay his annual tax even if they had no income, but
he increased the tax on those living to compensate for the amount of taxation
their deceased neighbors were liable to pay.

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Justinian I was rather ruthless when it came to taxation. There was a tax revolt
that boiled over on January 13th, 532AD, known as the Nika Revolt, which
emerged when an angry populace arrived at the Hippodrome in
Constantinople to watch the chariot races. The Hippodrome was next to the
palace complex where Justinian could watch from the safety of the palace. The
spectators were hurling insults at Justinian for his taxes.

Initially, it was a contest between two opposing teams known as the “Blue” and
“Green.” After race 22, the chants began to change to Nίκα (“Nika”, meaning
“Win!” or “Conquer!”). The crowds became violent, and for the next five days
the palace was under siege. They set fires that destroyed most of the city
including the church, the Hagia Sophia, which Justinian would impose harsh
taxes to later rebuild.

135
The riots had lasted for five days. The local police and military troops would not
suppress the people and this led some of the Senators to call for the overthrow
Justinian, for they were opposed to his new tax proposals that even targeted the
rich making him unpopular even among the nobility. The mob now demanded
that Justinian dismiss the prefect John the Cappadocian, who was responsible
for tax collecting, and the quaestor Tribonian, who was responsible for rewriting
the legal code.

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The lack of support from the police and military embolden them even further
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and they then declared a new emperor, Hypatius, who was a nephew of former
Emperor Anastasius I. Justinian now feared for his own life and was considering
fleeing Constantinople. However, his wife Theodora (500-548AD) who reigned
between 527AD and 565AD as Empress, assumed control.

Theodora’s intelligence based on street-smart made her a respected adviser to

her husband and she even championed religious theories. Yet when rioting broke
out in the Hippodrome between the right- and left-wing political factions, it was
Theodora who rose to the occasion and told her husband to stay. She then
instructed General Belisarius to defend the city who had an army outside of
Constantinople composed of troops who were not Greeks, but from Western
Europe.

136
Theodora sent Narses, a popular
eunuch, into the Hippodrome armed
with only a bag of gold coins. Narses
entered the Hippodrome alone and
unarmed to face the murderous mob
that had already killed hundreds.
Narses went directly to the Blues’
section, where he approached the
important Blue leaders and reminded

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them that Emperor Justinian
supported them over the Greens. He
also reminded them that the man

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they were crowning, Hypatius, was a

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Narses then distributed the gold. The Blue leaders spoke quietly with each other
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and then they spoke to their followers. Suddenly in the middle of Hypatius’s
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coronation, the Blues stormed out of the Hippodrome. The Greens sat, stunned.
It was at this time when General Belisarius stormed into the Hippodrome with his
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foreign legions and slaughtered the remaining rebels.

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Reports set the death toll at about 30,000. Justinian also had Hypatius executed
and exiled all the senators who had supported the riot. From the ashes, Justinian
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then rebuilt Constantinople and the church destroyed by fire – the Hagia Sophia,
which still stands to this day. Justinian was then free to pursue his ultimate goal,
the reunification of the Roman Empire.

The important lesson for political leaders from this affair was never use local
troops and police. Always import troops from another region for they have no
hesitation about killing people they do not know. The key is use mercenaries to
wield the authoritative power against the people to maintain absolute ruthless
control.

Therefore, the Justinian Plague came about 8.6-years after the Nika Revolt.
Justinian I raised taxes on the 50% who survived so his revenue would not decline.
This remains also a warning to those in power that push the people too far and
you will have a revolution.

137
 Panic is the Authoritarian’s
Ticket to Power

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W
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e have experienced serious epidemics throughout society over the

centuries where even up to 50% of the population have died as during
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the Black Death. A global pandemic is actually commonplace for its

definition is merely geographical whereas an epidemic is defined by the
proportion of society infected. Consequently, pandemics of this scale are not so
unusual, they take place every year during flu season. What is unusual about this
pandemic is how it is being used for political change. It was Joseph Stalin who
saw that ideas were just as dangerous as guns. What we have witnessed is fake
news based upon fake models that scared the hell out of everyone making
them fear they would die and that was the greatest gift to anyone seeking
authoritarian power.

In recent years, hundreds of health experts have written books, white papers,
and op-eds all warning of the possibility of a pandemic. Bill Gates has been
telling anyone who would listen, including the 18 million viewers of his TED Talk.
In October 2019, the Johns Hopkins Center for Health Security war-gamed what
might happen if a new coronavirus swept the globe.

138
Civilization has a very thin veneer. Some say it will vanish after 7 days. Certainly,
society cannot endure being locked down beyond 30 days. All the handouts
from governments will not prevent riots, robberies, or civil unrest. The
recommendations of those who see that locking down society will reduce the
spreading of a virus may be correct. We can probably cure the common cold
if we stayed home without human contact during the winter months.

However, these proposals from those in the medical field are myopic for they
are only looking at this from a medical perspective without any regard for the
impact upon society or understanding that civil unrest is often just 7 days away
from even a crisis created by storms.

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The economy is more than just money, it is the sum of the total capacity of the
people coming together. Civilization emerges when it is beneficial to come
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together as a group where the sum of the parts leads to a synergy that is far
greater than isolation. One person makes bread and that means each if us no
longer have to spend time baking bread. We can pursue our own talents. Thus,
as Adam Smith explained, the invisible hand emerges from this synergy that is
not directed or decreed by governments. It emerges naturally from the
interaction of people within society.

The proposals of self-distancing and staying at home are actually undermining

the very this that makes the economy and civilization work. We are witnessing
the most absurd proposal that is the equivalent of killing the patient in order to
declare we cured the disease.

As a society, we are experiencing a shock more sudden and profound than

anyone alive has ever experienced. Never before has society been so shut down
all based upon this exaggerated solution of shutting down the economy to beat
a virus.

139
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About one in five people in the United States have lost working hours or jobs. This
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is propelling unemployment back to the levels of the Great Depression and the
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damage may continue into 2025. Hotels are empty. Airlines are grounding flights.
et a

Restaurants and other small businesses are closing, and many will be unable to
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open. Commercial Real Estate has collapsed. Many are offering three months
free rent just to try to keep tenants.
Pu

Economically, the inequalities will widen. People with low incomes will be
hardest-hit by social-distancing measures, and they are most likely to have the
chronic health conditions that increase their risk of severe infections. Diseases
have destabilized cities and societies many times over.

But is there yet another political agenda behind the curtain? How much damage
has been caused by this panic? People have lost their freedom of movement
without question. Europe has used this crisis to close its borders to the refugees
and to force Germany to capitulate on its austerity philosophy. The tourism crisis
has undermined economies in Southeast Asia to Southern Europe and the
Caribbean. There has been a drastic contraction of the world economy which
will exceed 25%.

140
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Small business that cannot afford to pay salaries with everything shut down for 5
weeks only invites looting and civil unrest. Small businesses are shutting down and
may be unable to weather this insanity both in Europe and the United States.
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People are being fired everywhere in the USA just so they can collect
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unemployment.
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Advertising is also collapsing in newspapers forcing journalists to lose their jobs.

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There is rising concern that states like California will simply use this as the excuse
to seize pension funds to bailout government
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failures. That certainly becomes possible given

the losses they will suffer.

Then we have gold dealers in Europe being

directed to stop sales to individuals. Banks are
running out of cash. There is certainly now
justification for Europe to cancel the Euro and
force everyone into the digitalization of central
bank currencies.

We are looking at radical reform of the international financial system and the
likely bankruptcy of many businesses caused by this panic. The post-Coronavirus
world is going to be very different. It has been disproportionately whipped up
into a major panic creating a lethal weapon for mass financial mass destruction.

141
 The Cycle of Revolution

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T
he year 2020 is also 172 years from the contagion of the widespread
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European revolution in 1848. I have warned back in 2017 that we would

have the rise of the Sovereign Debt Crisis and the Revolutionary Cycle
come 2020. In 1933, Roosevelt came to power in the USA and turned the country
toward socialism. That same year, 1933, brought Hitler and Mao to power. So,
1934 was the revolutionary year. Such revolutions do not always bring blood in
the streets. The next one is due in 2020 and we should see the system we currently
live undergo completely upside-down.

The revolutions of 1848 were essentially a democratic movement and an uprising

against the political elite. In 1848, Karl Marx published “The Communist
Manifesto” with Friedrich Engels, and he was exiled to London as a result. In
London, where he lived the remainder of his life, he wrote the first volume of “Das
Kapital”. This undoubtedly influenced the revolutions that opened the door to
socialism/communism. This also inspired the collapse of the old feudal structures
and created independent national states.

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The revolutionary wave began in France in February 1848 when the French
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monarchy was overthrown. Communism actually began in France as a

“commune” where people lived in one shared community with no individual
property rights. It was the French who convinced Marx that communism would
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work better than just socialism, which he had advocated initially.

This 1848 revolution spread as a contagion, like what the American Revolution
had done during the previous century. The contagion of 1848 spread to most of
Europe and parts of Latin America. In total, it impacted over 50 countries. This
was by no means a coordination or cooperation between various revolutionary
trends around Europe.

Generally, a contagion is attributed to six factors: (1) widespread dissatisfaction

with political leadership, as we have today; (2) demands for more participation
in government and democracy, as republics have once again robbed us of our
right to vote; (3) demands for freedom of press, which is manifesting today in the
internet; (4) the demands of the working class, whom today have been
oppressed by huge tax rates combined with income taxes and VAT at 20%+; (5)
the upsurge of nationalism, which we are again watching unfold thanks to

143
terrorism; and finally, (6) the regrouping of the reactionary forces based on the
royalty, aristocracy, army, church and peasants, which is again unfolding as class
warfare.

The American Revolution really began in 1762 or 86 years before 1848. Indeed,
the very same issue that sparked the American Revolution was the government’s
practice of arbitrarily seizing assets and searching letters to see if anyone spoke
anything derogatory against the government. The NSA today does exactly what
the king’s men had done. In 2014 and 2015, the assets confiscated by police
exceeded all the property stolen by criminals. The police have replaced the
criminals in so many ways. They get to seize property and are rarely ever held

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accountable for killing citizens rashly. They always use deadly force rather than
resolving issues without killing someone in the process.

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These very same practices came to a head in the famous trial involving writs of
assistance to the revenue officers, empowering them, at their SOLE discretion,

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to search suspected places at will. This eventually became the reason for the
American Revolution and is what became known as the Fourth Amendment in
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the USA, which judges have swept away under the rug and no longer exists.
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The legal case which became the seminal beginning was Entick v. Carrington
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and Three Other King’s Messengers, reported at length in 19 Howell’s State

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Trials 1029. The action, dated November 1762, was for trespassing and interfering
with the plaintiff’s dwelling by breaking open his desks and boxes and searching
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and examining his papers.

The defense lawyer, James Otis (1725-1783), in

Boston pronounced that the writs of
assistance of the king were “the worst
instrument of arbitrary power, the most
destructive of English liberty, and the
fundamental principles of law that ever was
found in an English law book.” These writs of
assistance allowed government employees to
do whatever they wanted, as they continue
to do today. It is our burden to prove we have
rights – not theirs to restrain themselves. This
has placed “the liberty of every man in the
hands of every petty officer.”

144
Future president, John Adams, was there listening to Otis arguing in court. Otis, of
course, lost with the judge only ruling for the king. “Then and there,” said John
Adams, “then and there was the first scene of the first act of opposition to the
arbitrary claims of Great Britain. Then and there, the child Independence
was born.”
This is what cycles are about. Fourteen years after 1762 marked the American
Revolution in 1776 with the Declaration of Independence. After nearly one Pi
Cycle (31.4 years from Otis’ speech) George Washington was sworn into
presidency and the United States was born. It is always just a question of time.

The mere fact that we can observe regular cycles over long periods of

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time demonstrates one thing: we should never confuse the idea of FREE
WILL of the individual with the collective action of society. You will never find

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100% of the people in agreement. Thus, you are NOT compelled like a robot to

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agree with the majority. That is your individual FREE WILL. You would not be
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reading this if you were among the mindless majority. Society, however, moves
within a continuum with a sense of perpetual continuous motion. I have stated
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this before, but it needs to be repeated. Focusing upon the personality of Hitler
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or Napoleon misses the entire point. It is

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Society moves within a continuum with a sense of perpetual continuous motion.

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I have stated this before, but it needs to be repeated. Focusing upon the
personality of Hitler or Napoleon misses the entire point. It is NEVER the individual
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who moves the majority; it is the majority that produces the individual. Hitler was
imprisoned for what he considered to be “political crimes” following his failed
Putsch in Munich in November 1923. While
imprisoned, Hitler wrote “Mein Kampf” (“My
Struggle”). Dictating the book to Rudolf Hess,
Hitler outlined his political ideology and future
plans for Germany. Volume 1 was published in
1925 and Volume 2 in 1926. However, he came
to power in 1933 or about 8.6 years after
publication.

Society creates the leader, not the other way

around. If we focus upon the economy, this turns
the heat up for political change. Which
individual takes the lead is not the important

145
issue. Society will ALWAYS select someone. An individual cannot force their ideas
upon society no matter how loud they scream. Therefore, societal history is
indeed following physics like everything else. A body in motion will stay in motion
until there is some resistance to slow it down. Government’s mismanagement
grows larger and reduces economic growth to the point where we have tax
rebellions that often result in revolution.

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History is, in fact, modeled by a deterministic, non-linear, dynamic system that

displays chaotic behavior (Panic Cycles). Mapping the small changes within such
a system that ripple through the entire mass is fascinating, for such changes are
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never seen by the actor as impacting a far more dynamic system. FATCA, for
example, is directly reversing the global economic expansion by forcing
Americans back into a domestic economic environment that is worsening the
deflation external to the USA as the dollar is forced higher. The outflow of capital
from the USA reconstructed the world economy, whereas now that single tax-
hungry law set in motion the reverse consequence of destroying the world
economy. Therefore, in a mathematical sense, the slightest deviation to the
global economic system will eventually create a wildly divergent outcome. This
act is inspired by the fact that government is incapable of managing itself, no
less the economy that they do not even comprehend.

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Therefore, it is not that one man can make a difference. I tried that route and
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quickly saw that the best ideas were still ignored due to the self-interest of those
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in charge. Consequently, it is NEVER the individual, but society, that must reach
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the point where it seeks an answer and embraces a new idea. Rome collapsed
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during the 3rd century; this is when the Christian Persecution really surged. Some
argued the gods were angry because there were too many Christians, and this
is why they did not respond to the prayers of the Romans. Eventually, more and
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more people took the opposite view that their prayers were not answered
because they were false gods. Christianity took off and Constantine plundered
the pagan temples, pronouncing Christianity as the new religion so he could
confiscate that wealth and restart the empire by moving the capital to a brand-
new city — Constantinople (Istanbul today).

Therefore, history repeats because humanity never changes. What drives it is the
majority swinging back and forth much like Republican vs. Democrat political
victories. History is not made by the ideas of individuals; the individuals are
produced as a response to the shift in the flow of history that behaves in a
continuous manner by responding in the same manner to forces no matter what
century we look at. Once we abandon the deep analysis of people like Hitler
and step back from the individual to observe the collective community, suddenly
history takes shape, which conforms, like everything else, to the laws of physics.
So yes, we will see a European revolution. It is inevitable.
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Stalin was not Russian, though he spoke it. He was a native Georgian and spoke
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with a thick Georgian accent. Ironically, Hitler, though German, was by birth an
Austrian. He spoke German with a strong Austrian accent. Stalin's effectiveness
was his ability to instill fear in the people. Are we doing the same thing today wit
the Coronavirus?

148
 Russia & the Coronavirus

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R
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ussia is not exempt from the cray virus scare. Nevertheless, Putin has
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announced that beginning on March 28, Russians will have a week's

paid leave to stay at home. They will also be granted a moratorium on
mortgage payments, and business enterprises will be given credit holidays.
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Families entitled to government payments to support multiple children will

receive extra monthly payments.

Nonetheless, the coronavirus has taken on a political turn for Putin for he also
announced that a nationwide referendum on constitutional amendments which
were scheduled for April 22 has been postponed until further notice. These
reforms would allow him to remain the head of Russia until 2036.

Putin told the people: "We'll evaluate the situation and based only on the
recommendations from doctors and specialists we will decide on a new date."

This vote was to secure the Russian president's hold on power. Putin’s current
term ends in 2024, leaving Russia with a potential succession crisis. That is far
enough away not to present a true crisis at this moment.

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What is most interesting is that Putin’s term ends in 2024. That is the next turning
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point of the Russia Revolutionary Cycle. This certainly raises the question if
something will happen to Putin in 2024 other than simply leaving office.

Russia’s system of managed democracy appears to be less disruptive that

Western Democracy which has devolved into
grudge matches. Of course, the West see him as
a dictator for he has no serious political
competition. Putin has become the ultimate
arbiter of disputes between elites which is really
the role of even Biblical Kings like Solomon. The
political system of Russia would be in peril and
revert back to chaos if Putin were suddenly not
there. It would be more akin to the crisis in Rome
after Nero dies, who was the last of the
Julio/Claudian line.
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The April 22 vote was supposed to remedy that problem coming in 2024. While
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the West calls its Parliament just a rubber-stamp, they also fail to grasp the
problem of succession and how exactly will that unfold. Putin signed the
amendments, and the constitutional court
endorsed the proposed changes, which
must now be put to the popular vote
which could allow Putin to remain in office
until 2036.

The Coronavirus has thus disrupted the

flow of politics even in Russia. President
Vladimir Putin visited a hospital in
Kommunarka in protective gear. That is
perhaps more than most other Western
leaders to date.

151
 Conclusion

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W
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e need to answer one question: At what level does an economic

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decline become a Great Depression? Being an international adviser

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and hedge fund manager, I had a front-row seat in the world

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economy. I have been taught by my clients. I observed that the sum of the
whole was indeed made up of the parts. Tracking the movement of money for
investment flows showed the ebb and flow of global confidence. While others
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created a dollar index based on trade, I found such presumptions ludicrous.

Trade has been a small portion of capital flows
that such biases cloud our judgment and
blinds us to the trend.

In studying history, I came to realize that there

was a cycle to innovation as well. I agreed with
Schumpeter and his view of Creative
Destruction. We must realize that the economy
was already moving from bricks and mortor to
online. That meant retail sales jobs were a
gradually declining position like farmers in th
‘30s. As pictured above, even Walmart has
moved during this crisis to machine only
check-out.
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The prospect of getting a negative Real GDP number for the 1st quarter 2020
remains very plausible coming in at the -0.001% level. While there is slight hope
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that the low here during the 1st quarter of 2020 could be the low, the continued
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decline during the 2nd quarter will warn that the bottom will not come until the
4th quarter 2020 with the elections. Socrates projects the high in February in the
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Dow and a Panic Cycle was due in March. We have the next two turning points
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as April and June and then we head into August/September followed by

October/November 2020.
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When we look at the Array

on GDP, we whould expect
the decline into May. That
could produce the most
drastic numbers. The
Democrats are doing
everything in theior power
to blame Trump for every
death and to use the
deaths and fear they have
created among the people
aahainst Trump at every
possible moment.

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Even our Array on the Dow Jones Industrials publish back in October 2019,
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showed the turning point in February with a Panic Cycle in March with most likely
a low forming in April or at least the lowest monthly closing before there would
be any hope of a low coming into play.
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Nancy Pelosi is clearly making

politics the main issue. She
delayed any stimulus package to
stuff in things that had nothing to
do with the virus and then tries to
blame every death on Trump.

All the left politicians are lined up

in Europe and the USA to push
their agenda because they also
KNEW they were losing power. In
the USA, all the polls showed their
impeachment of Trump failed and
he gained support.

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This was the only way to push their Socialist agenda for the old generation of
Socialists are expiring. They support of Climate Change was not winning the day.
Championing a 16-year-old was a brilliant move to justify seizing industry, but it
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just fell short of enthusiasm. This is their last

stand. We have so many confirmations at
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this point that we are witnessing a political

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coup to deliberately destroy the economy

to (1) defeat Trump in the USA, and (2) to
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federalize Europe.

Millions of people have been seriously

harmed by this coup who are the average
people on the street. In many lessor
economies, they will have lost their jobs
permanently. The world stock exchanges
have crashed and many countries are
shutting down the economy without
justification imposing bans on going out
under threat of fines and arrest.
Unemployment claims in the United States have exploded and many small
businesses that have lost ground to online sales will simply use this as the excuse
to call it quits.

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There are many people who are raising their voices screaming, in fact, about
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the coronavirus is not a crisis. They point out how absurd and hysterical this has
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become. The measures are overly drastic, and doctors are reporting to us that
the tests have a 5% false-positive result. Thus, if 5% or less of the population are
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claimed to have “confirmed” cases, that means they probably have just a few
or none.

They made such a big deal out of Tom Hanks and his
wife being infected, the press has not really reported
that they are fine and returned to America.

Doctors on the front line have reported to us that this

does not even compare with the more serious influenza
virus. We have reports from qualified toxicologists and
immunologists who see the current corona crisis as
artificially created. This is clearly a political coup by the
left to seize power. They may not have realized how
much damage they would cause, but they will now seek to cover-up their
actions. We have DIRECT sources confirming calls were made and key people
were just told to sell everything because of this virus back in January.

156
While Denmark and Norway closed their borders, restaurants and ski slopes and
told all students to stay home this month, Sweden shut only its high schools and
colleges, kept its preschools, grade schools, pubs, restaurants and borders open
— and put no limits on the slopes. Sweden has rejected the idea of shutting doe
its economy and wisely so.

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Outside the United States in third world countries, we are looking at massive rise
in civil unrest. People have lost jobs and small busi9nesses have collapsed. This
scare has been devastating to the global economy from which there will be no
easy recovery (See Thailand, Pattaya). The greatest damage will be outside the
United States. What has been done to seize power is unbelievable.

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There is a major push to cancel the currency in Europe and since this virus is

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already being questioned by so many experts from the field, their grand plan to
eliminate the paper currency may have to be taken on an urgent basis. We still
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see the 2nd quarter as the turning point for the Euro. The losses inflicted on
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institutions have them in a crisis model of raising cash and have been selling
assets taking the funds home to cover the books for the end of the quarter.
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We have confirmation that the Bank of France is already conducting tests of the
digital currency they are trying to rush into place for the Euro. Once again, this
is a solution for Europe, not the United States or Canada no less Asia. The ECB
can no longer do anything. It has been trapped into negative interest rates since
2014 with nor possible exit plan without a complete meltdown of the European
Monetary System.
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I have written about what I called the Shadow Repo Market. This grew out of
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the Swaps market, but to make this clear, the Fed has been lending money to
central banks to help them since the Repo Crisis began on September 17th, 2019.
A number of people wrote and said they never heard of such a market. All I
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could say was my sources were direct.

Now the Fed has come out and announced that it is formally opening a “Special
Repo” to facilitate other central banks. Welcome to the dark side of the financial
world.

This is a political coup. I have probably the best reliable sources than anyone.
With time, perhaps this will all be exposed and surface. What will be the political
consequences when it does?

159